Business/Economics | Duke Research Blog

The Phishing Market Beyond the Internet

April 29th, 2013

By Ashley Mooney

Most people have heard of phishing scams on Internet, in which a person is tricked into giving up their money or identity by a clever ruse.

Temptations like this are found throughout all of capitalist society, says George Akerlof, 2001 Nobel Laureate in Economic Sciences. He discussed ideas from his upcoming book, “Phishing for Phools” wth a Duke audience on April 25 to kick off “Decision Making Across the Disciplines,” a two-day symposium sponsored by the Duke Center for Interdisciplinary Decision Sciences.

Akerloff studies connections between individual’s decision biases and larger economic phenomena.

George Akerlof won the Nobel Prize in Economic Sciences in 2001 for his research on economic decision making. (Image courtesy of Wikimedia Commons)

“Standard economics assumes that the people are smart, they may not know everything but they can be smart,” he said. “But there may be only one way in which you can be smart, but there are many, many ways in which you can be stupid.”

Akerlof, who is also Koshland Professor of Economics at the University of California, Berkeley, developed his idea of phishing for phools from his paper, “The Market for ‘Lemons,’” which secured his Nobel nod.

“A fool with an f is a stupid or silly person, but it’s perfectly possible to make an error when… making a perfectly intelligent decision,” he said. “Somebody who makes a mistake is a phool with a ph.”

Although markets have the ability to maximize wealth, Akerlof said it is a double-edged sword.

“Free markets open us up to be phools. They open us up to those who seek to influence us to do what they want, but it’s not necessarily good for our sake,” he said. “We live in a world where some 5 billion adults can phish us for being a phool. We’ve intentionally opened ourselves up to such exploitation because of obvious advantages, but then we must also think about the other side.”

Markets, Akerlof noted, aim for three weak spots: emotional weaknesses, cognitive weaknesses and ignorance due to blocked channels of information.

Phishing is common on the internet, but occurs throughout the market. (Image courtesy of Wikimedia Commons)

When people are aware of phishing, it has relatively little effect. But when one doesn’t know about a phish, it can have a major impact. He proposed that obesity, product misinformation and the recent economic recession were all caused by phishing for phools.

“In the United States, the goal of almost every businessman is to get you to spend your money,” he said. “Life in capitalist economy is a continual temptation.”

Akerlof said according to economics textbooks, people decide on their demand by budgeting spending and then choosing the things that will maximize their happiness. But most people, he added, are not honest with themselves and as a consequence do not engage in rational budgeting.

“A very significant fraction of consumers are worried about how they’re going to make ends meet,” Akerlof said. “Almost 50 percent of people probably could not come up with $2,000 in a month for unforeseen situations.”

The only way to prevent phishing is to know about it, and to make informed decisions with that knowledge.

“Phishing for phools… creates bad equilibrium, especially if we don’t know about phishing for phools, we think that markets are totally benign,” Akerlof said.

Activist targets inner child not ‘target audience’

March 4th, 2013

By Ashley Yeager

A baby albatross carcass full of plastic “food.” Credit: Chris Jordan.

When artist Chris Jordan works on a photograph or film, he doesn’t think about his audience. He said he thinks the phrase “target audience” is a disrespectful, manipulative business concept.

“I want to be as authentic as possible with my work,” Jordan said, explaining that each of his pieces instead taps into that “universality in us that we all carry, a deep appreciation for the abiding beauty of our world and the miracle of our own lives.”

An environmental activist as well as an artist, Jordan is challenging others to target that universality too as they convey messages about the issues that affect the planet.

Jordan spoke March 1 as part of a working group to discuss questions about how environmentalists, neuroscientists and artists can work together to better communicate about issues affecting the planet. The Nicholas School of the Environment and the Duke Institute for Brain Sciences sponsored the discussion.

Duke ecologist Nicole Heller moderated the discussion, opening it with the idea that scientists are frustrated with their inability to communicate with politicians and the public about the environment.

“In the ’70s, yucky or scary images might have worked, but now they don’t. That’s no longer appealing. We need different kinds of imagery to reach across people’s biases,” Heller said. She invited Jordan to speak because of his reputation for being able to move audiences from diverse backgrounds and education levels.

“Second graders are some of the most passionate and responsive to these issues,” Jordan said, adding that perhaps the best thing we can do is to appeal to an individual’s inner child – that curious spirit we have to understand how the world works.

One example of this approach is the film Jordan is working on to explore the mating dance of albatrosses on Midway Atoll in the Pacific Ocean. He’s photographed dead baby albatrosses, whose stomachs are full of plastic trash their parents fed to them because they mistake the plastic for food. The work was to make people aware of the plastic vortex, or Great Pacific Garbage Patch, swirling beyond the horizon and therefore beyond our conscious concern.

Jordan decided to capture the wonder of the albatrosses as they mate, rather than just their rotting carcasses, hoping to feed his audiences — no matter their background — with life, rather than depress them with death.

“Like the albatross, we first-world humans find ourselves lacking the ability to discern anymore what is nourishing from what is toxic to our lives and our spirits. Choked to death on our waste, the mythical albatross calls upon us to recognize that our greatest challenge lies not out there, but in here,” Jordan writes on his Web site.

Crossing the Valley of Death

October 3rd, 2012

By Nonie Arora

David Adams shared his concerns about the output of America’s drug development pipeline at last month’s Science and Society Journal Club at the Institute for Genome Science and Policy (IGSP).

When it costs more than $1 billion to bring a drug to market with many failures along the way, “many (drug) companies are focused on de-risking,” according to Adams, an Associate Professor of Medicine in the Division of Medical Oncology.

Adams said the pharmaceutical industry seems to be counting on biotech companies and academia to help drugs cross the “Valley of Death” in anticancer drug development, but that has yet to happen.

While the rate of publication and quantity of scientific data continue to increase rapidly, not enough funding is being devoted to the “translational” research, which helps an idea make it from the lab to the clinic, Adams said.

Example of a tissue chip project sponsored through NCATS to improve drug safety. Credit to NCATS website.

The pharmaceutical industry has cut down on translational research, Adams said. Essentially, companies don’t want to take on projects unless they have a very high probability of success.

He also said that the National Institutes of Health (NIH) is generally risk adverse and tends to fund projects that represent “the next logical step,” rather than going for higher-risk, but potentially higher-gain ideas. The National Center for Translational Sciences (NCATS), established by the NIH director Francis Collins last year, is a promising step, Adams said.

When researchers design their cancer studies, many times they “don’t really take into account tumor physiology because we live in this era of molecular biology,” Adams said. He believes accounting for tumor physiology is very important. For example, doctors are rarely able to monitor how much drug makes it to a tumor, but translational research could solve this problem, said Adams.

Adams said drug development is also hampered by a human tendency toward “technological lock-in.”

Personal Genome Machine Sequencer Credit: Benchmarks, a publication of the National Cancer Institute

“Why do we not change the way that we do things when there is compelling evidence to do so?” He argued that:

1) people resist change in research and clinical environments because they are creatures of habit and convenience,

2) academics and clinicians often operate in silos rather than multidisciplinary teams that would enhance communication, and

3) we are obsessed with technology, as evidenced by genomics.

Adams said a new area to watch out for is theranostics: compounds that combine a therapeutic and diagnostic in the same formulation. Another area is miniaturization of electronics to permit real-time measurement of drug activity in and around tumors. An implantable radiation dose monitoring system is already commercially available and implantable sensors for management of diabetes are in the pipeline.

Ultimately, greater emphasis on translational research and breaking technological and organizational lock-in may help us cross this “Valley of Death,” he said.

Monkey Marketing and Poop-Dodging

September 12th, 2012

by Ashley Mooney

Have you ever thought of advertising to a monkey?

Junior Yavuz Acikalin, an economics and neuroscience double major, is doing an independent research project with the Platt Lab that deals with just that—monkey advertising. Acikalin’s project deals with whether or not one can influence primate reward preferences by branding rewards. Branding involves using associations between brand logos and images of female monkey perinea—“sexy images” for monkeys in his words—and high status male faces.

“Finding similarities between how mainstream methods of marketing affect humans and monkeys can lead to a better understanding of the evolutionary factors that affect consumer behavior,” he said. “Experiments on monkeys can help us better understand the irrationalities that happen in the markets, and more importantly, the brain mechanisms that underlie the effects of advertising on consumer behavior.”

The lab, run by Michael Platt, director of the Duke Institute for Brain Sciences and Center for Cognitive Neuroscience, studies how the brain decides between different actions. A main focus of the lab is on value-based decision making, and the brain mechanisms responsible for these processes—in summary, neuroeconomics, Acikalin said.

His daily duties include writing Matlab code for the touch-screen interface that the monkeys use, he said. He also writes code for data analysis and runs the experiments.

Acikalin noted that he loves animals and cannot live without having multiple pets at home, making his time with the monkeys rewarding. His research, however, does come with its downsides.

“My least favorite part is dealing with all the biohazard on a daily basis—or more precisely, monkey poop,” he said.

‘Chicken’ Logic Secures Planes, Trains and Ports

July 13th, 2012

By Ashley Yeager

U.S. goalkeeper Hope Solo deflects a penalty kick. Credit: AP

Soccer penalty kicks, ‘Chicken’ and other games may thwart terrorist attacks, drug smugglers and even freeloaders trying to board trains without tickets.

It’s not so much the intensity and adrenaline of the games that lead to better security, but the logic the players use, says Vincent Conitzer, a professor of computer science and economics at Duke.

This logic is called game theory and now scientists are using it to compute solutions for security issues, Conitzer explained at a July 11 talk with undergraduates completing summer research projects on campus.

During the talk, Conitzer gave a brief overview of game theory using real-world examples, such as penalty kicks in soccer and a set of drivers playing chicken. In the soccer example, he described a “zero-sum game” between the goalie and the kicker, where no matter the outcome, one player wins and the other loses.

But in the case of chicken, in which two cars drive straight at each other until one of the drivers “chickens out” and diverts course, the stakes of each choice are a bit higher. If both drivers stay straight, they crash. It’s no longer a zero-sum game.

When it comes to preventing security problems, there are more angles of attack, smuggler entry points and ways to board a train than the simple left, right or straight of these game examples.

Cars and buses wait to clear a security checkpoint at LAX. Credit: cardatabase.net

To make predictions about what the bad guys will do in the security scenarios, Conitzer is working with Milind Tambe and his group at USC. The team has designed game theory algorithms to set the schedule of security checkpoints and canine rounds at LAX airport, smuggler-scouting in Boston Harbor and even methods for preventing terrorist attacks in Mumbai.

Tambe “treats the problem of Mumbai personally” since that is his home city, Conitzer said, adding that he is only directly involved in this project with the USC group.

While the talk focused mainly on security applications, Conitzer also thinks that some “surprising new applications have yet to emerge” from the work. The new uses won’t necessarily help win a game of chicken or score a penalty kick.

But they could help scientists understand how to better use incentives to designgames with only good outcomes, such as encouraging smart energy use.

Citation: “Computing Game-Theoretic Solutions and Applications to Security.” Conitzer, V. In Proceedings of the 26th National Conference on Artificial Intelligence (AAAI-12), Toronto, ON, Canada, 2011.

A Desensitized Fool Can Be a Little Monster

June 13th, 2012

By Nonie Arora

Lady Gaga Caution Tape Outfit, Credit: New York Magazine

Look at the Lady Gaga photo, how shocking do you find it?

Many people find Lady Gaga’s outfits shocking. But they don’t always think so the fifth time they see the same outfit. According to a recent study, extra exposure to photographs of Lady Gaga changes how subjects predict others will react to seeing the image for the first time.

Troy Campbell, a marketing PhD student in Fuqua, conducted a study to determine whether people who are desensitized by repeated exposure to a shocking picture will be able to accurately predict how someone else will react. He conducted the research with Ed O’Brien at the University of Michigan and other social scientists at Duke University, the University of Michigan, and the University of Colorado. Their overall finding is that desensitized subjects don’t do as well at predicting others’ reactions.

A simple example of desensitization would be hearing the same joke five times. It gets less funny. Generally people believe that experience leads to predictive knowledge, so it’s interesting that that test subjects got worse at predicting how others would respond to the Lady Gaga photographs.

In follow-up studies, Campbell and colleagues found that more exposure to the same jokes made people worse at selecting a joke that unexposed audiences would find the funniest. According to Campbell, people generally understand that they and others desensitize at times, but they frequently fail to notice and correct for it in themselves and others, and that can lead to poor decisions.

Troy Campbell

“Desensitization can not only turn us into ‘fools’ who tell the wrong jokes but also ‘monsters’” Campbell says. In one study, the researchers exposed two groups of human subjects to a painful noise for 5 or 40 seconds and then asked how painful the last few seconds of the noise was. The people who heard the sound for longer found the last few seconds to be less painful. The subjects were also asked to predict how painful 5 seconds of the noise would be for a person who had never heard the sound. People who had heard the sound for longer said the next five seconds would be less painful. Now what is fascinating is that people exposed to the sound for 40 seconds reported that they would feel less guilty when exposing the noise to someone else. Presumably, this is because the group of people exposed to the noise for 40 seconds perceived less pain in the last few seconds because they became desensitized.

Campbell says it can be dangerous when people project their sensibilities on to other people.

Campbell and O’Brien are looking to continue this line of work by investigating whether people are forgetting their original response of how they felt when they first saw the Lady Gaga image. This is one way to consider the bigger question: “Are memories we’re not thinking about truly gone or can they be accessed completely or in a flawed way?” How about you, do you remember distinctly finding the Lady Gaga photograph less shocking a minute ago? Campbell and his colleagues want to know; leave a comment below and help them with their future research.

Before coming to Duke, Campbell studied psychology at UC Irvine where he was mentored by Elizabeth Loftus and Peter Ditto. He began his undergraduate studies focused on creative writing, but became more interested in psychology. He thinks that social science is exciting because it can test competing theories of conventional wisdom. Good ideas can come from day to day conversations, according to Campbell. Campbell also worked for a summer as a Disney Imagineer, which gave him the opportunity to improve visitors’ Disney experience. Now, Campbell is collaborating with Peter Ubel and Dan Ariely as he pursues his doctoral degree in marketing from Fuqua.

Unions: They Do a Body Good

June 5th, 2012

By Eric Ferreri, News & Communications

Union members say they're healthier than non-union employees.

A new Duke study suggests that labor unions are good for your health.

The research finds that more unionized American workers consider themselves healthy than do their non-union counterparts, an indication that membership is good for the body as well as the paycheck, said David Brady, a Duke sociology professor and co-author of the study.

“Unions are taking a beating in American culture,” Brady said. “But here we can say that not only are unions better for your wages, they’re good for your health.”

The study, which appears in the latest issue of Social Forces, examines survey results of more than 11,000 full-time workers, both union and non-union, who answered questions about their general health. The data is from the General Social Survey, a massive effort of the National Opinion Research Center providing more than three decades of data.

One finding: 85 percent of union workers reported being in good health, compared to 82 percent of non-union workers.

In real numbers, that 3 percent gap represents 3.7 million American workers.

“Three percent may not seem like a lot,” said Megan Reynolds, a Duke doctoral student and lead author of the study. “But when you start looking at the number of workers in the United States, that’s a lot of people.”

Brady and Reynolds say the difference is comparable to the physical benefits found to be associated with being married rather than divorced or being five years younger.

Union workers comprise just about 11 percent of the American workforce.

Brady and Reynolds culled the data to compare workers with largely similar characteristics aside from their union membership. They believe this is the first study to do so and illustrates that union membership is another factor – like age, education level and marital status – that affects a person’s health.

CITATION: ”Union Membership and Self-Rated Health in the United States.” Megan Reynolds and David Brady. Social Forces. March 2012. DOI: 10.1093/sf/sor023

Finding the People Who Know Things

March 29th, 2012

By Becca Bayham

“The first thing people did besides eat and reproduce was tell stories,” reporter Charles Fishman said during a lunch with Duke students and visiting Media Fellow journalists, March 19.

As a writer for the business magazine Fast Company, Fishman tells stories for a living.

“I am not a conventional investigative reporter,” he said. “I’m trying to find out how the world really works … If I find out things that are exciting and fun, then I can tell a good story.”

Fishman got his start at the Washington Post, later working at the Orlando Sentinel and Raleigh’s own News & Observer. He said that his years at the Post were a formative experience.

“It’s really important to write about a community that you then have to be a part of everyday,” Fishman said. “These people read my stories, and then I saw them. That inevitably changed both our behaviors … It kept me honest, and they knew that whatever they did would be in the Washington Post.”

Fishman described the process behind some of his major stories, including a 2003 article about Wal-Mart. Assigned to write about the massive multinational retailer, Fishman found that Wal-Mart wields an inordinate amount of influence over its suppliers. Proctor & Gamble, for example, employs 300 people merely to manage its business with Wal-Mart. Most suppliers have at least one representative located near in Wal-Mart’s Bentonville, Arkansas headquarters.

Fishman wanted to learn more. However, he realized that no company representative would want to speak with him, when candidness could cost them their jobs.

“There was more reason for someone in the C.I.A. to talk to me than one of these people,” Fishman said.

A friend gave him access to a listserv of marketing professionals; he used it to reach out to people who had previously worked for supplier companies. He discovered a network of people who were willing to talk, because their jobs weren’t on line. Fishman eventually wrote a whole book about Wal-Mart.

The moral of the story? In today’s world, it is increasingly possible to find people that know the answer to your question.

Fishman also advised the group of assembled students and journalists to keep real people in the picture.

“Those voices and those emotions bring your storytelling to life,” he said. “You need to make the phone call. Don’t be a press release service.”