9th Conference on the Economics of Information and Communication Technology

At the end of June the Centre for European Economic Research (ZEW) hosted its ninth conference on "The Economics of Information and Communication Technology (ICT)", which was attended by 50 scientists from both Europe and North America. The two day conference was organised by ZEW’s ICT research group with financial support from the German Research Foundation (DFG).

The opening keynote speech given by Avi Goldfarb (University of Toronto, Canada), was aimed at the question to what extent geographical distance may be rendered irrelevant through the use of the internet. Using a webpage for "crowdfunding" for aspiring bands and musicians as an example, Goldfarb illustrated whether or not the investment decision was made independent of geographical distance. His study, based on data supplied by the webpage “Sellaband”, yielded two differing but significant insights. Primarily, the high average geographical distance of 5000 km between the investor and the recipient band indicates that geographical distance does not influence the investment decision. By contrast, local investors, a group often composed of friends and family members, still play a crucial role in the early funding stages.

Focus on Advertising and Marketing

In this year’s conference much emphasis was laid on the topics marketing and advertisement. Along these lines one presentation addressed the question of whether the introduction of performance-related reward schemes were to limit the variety of publications and opinions expressed by bloggers, given increased incentives to focus on subjects with considerable mass-appeal. The study was based on data from a Chinese webpage that compensated their bloggers with a share in their advertising revenue proportional to the number of their readers. It turns out that the rewards scheme reduces the variety in terms of topics, whereas the quality of the articles themselves improved. Another marketing lecture regarded viral marketing in form of strategically placed messages. Using data from a telecommunications company’s marketing campaign, the study revealed the substantial importance of the individual network position for the success of viral marketing. Furthermore, another piece of research shed light on the connection between television ads and search engine queries. The results revealed that TV commercials advertising financial services would not lead to an elevated number of search engine queries on the matter, yet they would lead to an increase in queries concerning the actual company, thus exerting a positive effect on the company nonetheless.

Among various other areas which were included in the broad spectrum of topics covered by the conference, it also embraced the economics of innovation, labour and macroeconomics in the context of ICT. Moreover, both empirical and theoretical contributions were concerned with the economics of network infrastructure, online markets, computer games, search engines and news.

The closing keynote was given by Dina Mayzlin (Yale School of Management, USA) on companies’ self-portrayal on product review websites. Her study explores the extent to which companies disseminate critiques and reviews of their products themselves and the motivating factors for this kind of manipulation.  Using data from the hotel review websites “TripAdvisor” and “Expedia” she was able to demonstrate that this form of deception occurs, especially in an increasingly competitive environment.

The conference benefited from the exceptional work done by the scientific committee, which had carefully selected the presentations at the conference from over 60 studies submitted in anticipation. The committee was composed of Ulrich Kaiser (University of Zurich, Switzerland and ZEW), Mary O’Mahony (University of Birmingham, UK), Martin Peitz (University of Mannheim, ZEW), Catherine Tucker (Massachusetts Institute of Technology, USA), Tommaso Valletti (Imperial College London, UK) and Joel Waldvogel (University of Minnesota, USA).