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January 9, 2004
Phantom Authority in the Wikipedia
Posted by Clay Shirky
Interesting article over at First Monday:
Phantom authority, self-selective recruitment, and retention of members in virtual communities: The case of Wikipedia, including this nice bit of economic analysis on the ways wikis (or at least the wikipedia) works:
Any transaction involves costs (Coase, 1937; Williamson, 1985). These range from the costs of writing a contract, to the costs of negotiating how to deal with unexpected contingences, from the costs of coordination to the costs of motivation (or commitment). Such costs are determined either by human characteristics (bounded rationality and opportunism), or by the type of transaction (frequency, uncertainty, asset specificity).
Teece (1988) claims that high transaction costs represent one of the main limits to the division of labour in the production and use of knowledge.
Wiki technology in a way literally cancels transaction costs for editing and changing information. Hence, this reduction in transaction costs acts as a catalyst for the development of the community. In turn, these reduced transaction costs means that there is full exploitation of massive collaboration economies. Hence, in the case of horizontal information assemblages, we might argue that any incentive that allows more authors to freely join in a given task, the larger the assemblage of information that is eventually produced (or in the case of Wikipedia, a larger number of articles is possible).
Comments (2)
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1. Ross Mayfield on January 9, 2004 1:12 PM writes...
Great find Clay. Important to note that these economies work at both the macro and micro scale.
Permalink to Comment2. Zack Lynch on January 9, 2004 2:07 PM writes...
As noted, by reducing the spatial transaction cost of finding and sharing knowledge, information technology has played an important role in flattening organizations down from their hierarchical, industrial predecessors.
So as information transaction costs continue to fall (e.g. the cost of processing a million operations fell from around $75 in 1960 to less than a thousandth of a cent in 1994...anyone know what it is for 2004?), what will be the next major limiting transaction cost?
What is at the core of contract negotiation, motivation, comittment, etc.?
One emotion that underlies all activities is trust.
Trust pervades nearly every aspect of our daily lives. As we learn more about the neurobiology of trust, how people make decisions, and the many other components of human social interaction that go into everything from contract development to dispute resolution, the emotional transaction cost of doing business will drop precipitously.
For all the value that social software will provide organizations in the coming years, I think one of most valuable results will be that it will begin to highlight more specifically the type of emotional transaction costs associated with business transactions.
There is a bit more on this here:
Permalink to Commenthttp://www.corante.com/brainwaves/archives/000528.html