Wednesday, February 22, 2006


I am a big fan of Wikipedia, now having made over 1000 edits. I am also taking a Managerial Economics class at the University of St. Thomas as part of the MBA program. I also have been a big fan of Ronald Coase economic theory for the last four years. In his theory (developed in the 1930s) he studied transaction costs. He asked question such as “why are firms the size they are”? His analysis is that firms grow when they can out find a low-cost way to outsource a function. But outsourcing includes transaction costs including finding a service, writing a contract, policing the service and analyzing the cost of the service. This background has inspired me to think more about the economics of information. Much work on this has already been done by Ray Kurzweil and documented in an appendix to his book “The Singularity is Near”. This appendix is titled “The Law of Accelerating Returns”. In this appendix Kurzweil writes the following formula: V=cW Where V is the rate of change of computation, c is a constant and W is “World Knowledge”. Kurzweil then goes on to speculate that the rate-of-change of world knowledge is proportional to world knowledge: D(W)/dt = cV By solving these equations he shows that World Knowledge grows exponentially with time. Actually it grows at double exponential rates. This prompted me to ask, what formulas govern the growth-rates of the web and Wikipedia? The key insight is to understand that making it easy to add content lowers overall costs of contribution. This is the transaction costs that Coase referred to. My general thesis is that Wikipedia will continue to grow exponentially as long as they make it easy for people to make contributions. An the more people find about Wikipedia, the more people with learn how to add their knowledge. Thus, Wikipedia will eventually grow till it envelopes the earth. Semantics will be added and Wikipedia will then ask its own questions and find experts to fill in the gaps. Eventually Wikipedia will become self-aware and take over the earth like in the 1970 science fiction movie The Forbin Project. Remember, you heard it hear first. I may have to start a wikinomics page on this subject. - Dan


Par Jason Engle said...

I'll chime into that thesis, but add several other possibilities.

As a production factor, world knowledge may grow exponentially now, but we have not known a day where more knowledge when combined with Labor and Capital becomes marginally less useful. Thus diminishing marginal product of world knowledge (DMPWK!) is a real possibility at any point.

As a biological corrolary, we may also run into capacity problems. We are pushing the limits of our ability to think! Go figure. Our minds become limits to the value of knowledge itself. Bodies of knowledge may become more prohibitive to store and retrieve in our collective memory that they become, for us, uncollected memories. Bits of history that stay forever on the cuttring room floor, like so many tapes of televiosion newscasts from the 1970s in Madison WI.

But precisely categorized!

Dr. Data Dictionary said...

Thanks for you comment. I agree that perhaps our minds will be a limiting factor. But what if we use knowledge to enhace our minds? What about memory implants? And what if we rearrange our brains to use different structures? Less bits and bytes and more classes and properties and ontologies?

Anonymous said...

Interestingly enough Don Tapscott is currently writing a book titled Wikinomics. I don't think it involves the world being taken over by a super-Wiki though.