Social interaction in ten years

Imagination based on agency problem and game theoryBy Peiyuan Xu

Predictions1. Fewer lies2. Disappearance of cell phones3. Social interaction between human beings and machines and

between machines and machines

1.Fewer lies

1.Fewer lies —— Do you lie?• People lie thousands times in their life. • You look gorgeous!• You look so young!• This jacket suits you best!

1.Fewer lies —— Reason for lying• Economic perspective:• Game theory tells us that lying or not depends on the payoff they

generate. If by lying he gets to a high payoff, he will lie; if by not lying he gets an high payoff, he won’t lie. • Socialist perspective:• People lie because they need to maintain a good relationship with

others and in most cases people are selfish, caring more about their own benefits. Some lies maybe benevolent, such as a breakup between a couple, because it’s better saying you are a good man but we just don’t match than saying you are pool.

1.Fewer lies —— Big data reduces information asymmetry• Definition:

Big data is a broad term for data sets so large or complex that traditional data processing applications are inadequate(Wikipedia).• Characteristics of Big data: 4V

Volume, Velocity, Variety, Veracity

1.Fewer lies —— Big data reduces information asymmetry• What we do with small data?• For example, econometrics is a discipline which uses sample data to

simulate the results of whole data and proves that the regression coefficients are BLUE(Best linear unbiased estimate). More observations you acquire, more accurate estimates you will get. • In financial economics, volatility of stock return (or price) is the

information about the company. The longer you observe a stock, the more information you will gather and more accurate you are about the fundamental value of the stock.

1.Fewer lies —— Big data reduces information asymmetry• What we do with big data?• Many scientists use sample data to simulate the results of the whole

data, because processing all data requires extremely advanced computer. However, if computer science keeps developing at this speed, processing huge data may soon won’t be a problem. With big data processing becoming possible, we won’t have to prove that the estimates derived from sample data is unbiased, instead, we directly get the real estimate.

1.Fewer lies —— Big data reduces information asymmetry• What we do with big data?• The same logic applies to personality. If we know a person enough

long, we can easily tell if he is lying. But in real world, we do business with so many people we barely don’t know and all his historical trade records, credit records are inaccessible to us. In a word, the cost of eliminating the information asymmetry is so high that slow down potential growth of business.•

1.Fewer lies —— Big data reduces information asymmetry• What we do with big data?• With big data technology, we don’t have to wait long to discover a

person, because information technology will save all his historical information(what he buys, where he goes, what he eats, what disease he has, etc.) and keep the info available. If we need to know someone, all we need to do is getting all his information processed, then we will be able to predict what he will eat, what he will buy and what he will say. When the cost of access to these information reduce to low enough level, we can all tell if he is lying even it’s the first time we meet.

2.Disappearance of cell phones

2.Disappearance of cell phones——Biochip• What is Biochip?• Biochip is high-technology chip which can implemented beneath

human's skin. It can detect the information in cell level, such as chemical material level and also be able to send and receive message between other electronic devices.

2.Disappearance of cell phones——Biochip• Possible situations • People don’t need actually to open the mouth to communicate with

each other. We can interact instantaneously through signals emitted by biochips implemented in everyone’s body. As the electromagnetic wave travels as fast as light, why bother opening the mouth?• However, implementing this biochip should be voluntary, because if

the chip is hacked, then the privacy certainly will be in great danger. Related laws should be developed as well. • People can not lie, because when you lie, the fluctuation of some

chemical materials’ level will betray you.

2.Disappearance of cell phones——Biochip• Possible situations • People can not lie, because when you lie, the fluctuation of some

chemical materials’ level will betray you.

3.Diversified social interaction

3.Diversified social interaction——Internet of Thing(IoT)• Definition• The Internet of Things (IoT) is the network of physical objects,

devices, vehicles, buildings and other items which are embedded with electronics, software, sensors, and network connectivity, which enables these objects to collect and exchange data. (Wikipedia)•  

3.Diversified social interaction

• Possible situation:• Interactions will not just exist between human beings, but also

between human and machines, even machines and machines.

3.Diversified social interaction ——Internet of Thing(IoT)• Interactions between human and machines• The development of biochip and IoT will help us get rid of remote

control of air condition, TV, etc.. The biochip will connected to the IoT when you come home, the lights, the air condition and the TV automatically turn on. • When you want to change channel, just blink your eyes or even just

with a thought.

4.More…...

4. More…

• One may actually talk to your puppy through biochips • With the help of biochip, a boy can tell if the girl he sees in the street

has a crush on him by detecting the hormone level fluctuation.• …...

Thank you for your attention！Peiyuan Xu

xupeiyuan123@gmail.comDepartment of Finance, School of Economics and Management,

Tsinghua University