Present and future challenges of the

Reputation Economy

@JC2GO

Juan Cartagena

Close Network

In a close network, everybody knows everybody else. If one player defects on another player, the rest of players will sooner or later learn about this and will take the bad player off the network. For example, in a network of Friends.

@JC2GOFirst Concept: Close networks vs Open networks

Open NetworkIn open networks, the links between people might not be shared with other people in their own network. In this case, if Red defects on Blue, Red still keeps her network of friends intact, as they will not learn about what happened to Blue. !Think buying and selling second hand from a stranger. If you get a lemon car, your friends will know, but he will not be affected.

@JC2GO

First Concept: Close networks vs Open networks

Close Network Open Network

Reputation: Efficient mechanism of social control

@JC2GO

First Concept: Close networks vs Open networks

Reputation in the past@JC2GO

In the past, we lived in the same town for many years, selling the same cheese to the same people. If we sold bad cheese today, people would find out quickly and stop buying at your shop. Reputation was built with every transaction, every day, over years, from fathers to sons.

@JC2GO

Open Networks: Reputable Third Parties

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When town became bigger, we could not know everyone, so we had to start to trust brands, as a proxy for people. !You trust a consultant for the firm McKinsey. You trust a lawyer if his previous customer was Apple. You trust a doctor if she studied at Harvard. And you trust a new customer if she pays with Visa, because Visa covers the transaction, regardless.

So we have 2 dimensions for reputation

@JC2GO

3rd Party EndorserPrevious History of

Transactions

And they are complementary.

Typically in Open Networks Typically in close networks

Endorsement

Previous History

Business Repetition = Low Risk

But you cannot extrapolate to other things. Good selling cheese does not mean good

driving cars.

The Unknown. !

Little to lose because noone will find out = High Risk

Reputation of the community. Brand extension from the institution to the

person. !

A lot to lose if you are expelled from the network = Low risk

High business repetition. High community interaction.

!Low risk, low friction.

Big Transactions. Intimacy.

Insurance Relationships

(your trust your own m

other w

ithout need for endorsement

for endorsement)

@JC2GO

@JC2GO

Scruffy little guy who offers pet detective services. Might be the best in the world, but how to trust him?

We already do all sorts of transactions with strangers.

@JC2GO

Asset at Risk

Personalinteraction

buying selling 2nd hand

care takers Babysitters

Sharing a ride

Pet home-sitting

Sell homes / cars

Gardener Online dating

rent camera rent your car

Rent House

Exchange cardsor video games. Returns required.

Group Meetups

Importance of Reputation@JC2GO

The value of the asset and the personal interaction leads the importance of reputation, for both endorsement and history.

With more transactions happening between strangers… !

How do we avoid irregularities to maintain social control?

@JC2GO

Into the world of Digital

Statistics are sufficient. The

quality of a book is easy to

measure with people reviews.

Not easily applicable to humansby: xkcd.com

Products@JC2GO

handshake protocols (Blockchain)

Sharing houses

Sharing cars

From quasi-static communities… … to dynamic transactional networks. !Each network is a piece of the puzzle, adding contextual data. Better decisions

The present and future of digital reputation

Petsitting

@JC2GO

Recommendations from weak links, even for other contexts like house sharing or car sharing, can help Blue to make a better decision about interacting with Red

The future: Infinitely meshed weak-links of reputation

- Infinite History- Any to Any Endorsement- Multi-layer chain of contact- Offline to Online reputation- Each link is contextual- Negative links >> valuable

@JC2GO

As reputation becomes important for all our transactions…

… What will the role of Reputation in our society be?

@JC2GO

- Dividends to yourself? - Benefit in giving other people reputation?

Risk to yourself for giving it to the wrong person - Liabilities? Negative reputation? E.g.: People on LinkedIn only give

positive reviews. No incentive to jeopardize a relationship.

“Currency… because it is the oil of collaboration economy”

“Asset… because it is an important part of our personal value”

- Can be exchanged freely and has the same value everywhere - When I give you a dollar, I lose a dollar. Not with reputation… - Is there a limit to Inflation? (I give you a point, you give back) - Cannot everyone be rich in reputation? - Dollars from different people may have different value?

@JC2GO

What is being said:

but…

but…

Reputation = Risk Premium

In my opinion…

- helps make better purchase decisions and whether transaction will take place at all

- Helps to choose between different options at different benefits and risks levels. Higher reputation might lead to higher prices and more safety of mind. More elastic people are more likely to accept lower reputation or lower level of safety.

- The risk can be reduced with more data

@JC2GO

Challenges and unsolved debates for the next 10 years

Who owns your reputation? !

!

Right to forget? Right to delete? !

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The value of negative reputation is High.

today your eBay stars only work within eBay.

If we delete all the negative stuff, reputation is worthless. But we might need to reduce the negative value of negative reputation of old stuff or even delete it after X years.

If you have 47 positive reviews on eBay and 1 bad one, people will go to read the bad one. Negative reputation data is critical for decision making.

Challenges and unsolved debates for the next 10 years!

Reputation of criminals who trust each other !

!

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People left out - Offline to Online reputation !

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Letting algorithms determine reputation. Inhumane?

Criminals trusting each other can lead to positive profiles.Need to be careful to measure the diversity of reputation.

My mother does not have ebay or AirBnB. But she has a good reputation. How do we make sure that people are not left out of opportunities?

If Algorithms run the show, perverse incentives. If humans need to read all the data of millions of transactions, they will make bad decisions.We need the right mix of complementarity to make right decisions. But how much?

Thanks very much :)jc@traity.com

@JC2GO

About Juan Cartagena

Founder of Traity.com, we are trying to create a world where we can trust one another.We are currently doing a lot of research on the topics explained above, trying to aggregate information in ways that will let humans make better decisions. The challenge is immense but so is the inspiration to make it work :)