2. 20 marks Faceboook or Google Buzz? Suppose there are only two main social media sites in the world, Facebook and Google. Suppose further that initially there was only one: Facebook, but that there

2. 20 marks Faceboook or Google Buzz?

Suppose there are only two main social media sites in the world, Facebook and Google.

Suppose further that initially there was only one: Facebook, but that there was a lot of

dissatisfaction with it. For example, complaints ranged from: ‘they changed the way the

news feed works’, ‘the privacy settings are awful’, ‘there are too many game notifications’,

‘why am I friends with people who post things like that?!’, and so on. Recognising

customer dissatisfaction with Facebook, Google has tried three times to enter the social

networking market, first with Buzz, then with Wave, and most recently with Google

Plus. Some say that the current Google Plus platform is superior to Facebook’s, yet it

seems to be accepted that the first version of Google Buzz was not.

Let’s compare Facebook with the first ‘inferior’ version of Google Buzz. Specifically,

• There is a large population of N people.

• Social media is time-consuming, so, while everybody wants to exist on a platform,

each person has time for only one options with the only two available options being

Facebook and Google Plus, denoted by f and g respectively. Therefore, in this

game, each individual chooses one strategy from the set {f, g}.

• Once each person has chosen an online platform, he/she interacts pairwise with

everyone else in the population via the following 2-player game, where the same

platform is used with everyone else.

P1

P2

f g

f 2, 2 0, 0

g 0, 0 1, 1

(a) 5 marks While this is not a dynamic situation, the utility functions to this large

population interaction are closely related to those given on slide #30 of Lecture 9.

As precisely as possible, relate the situation above to the parameters on slide #30.

[Hint: you can ignore the from slide #30.]

(b) 5 marks What are the pure strategy Nash equilibria for this large population

game?

(c) 5 marks What online platform would you expect the population to end up using?

Brie y explain why.

(d) 5 marks Suppose Google tried to make their platform compatible with Facebook

(and that Facebook were powerless to prevent this). In no more than four short

sentences, discuss how this might change individual's utility functions, and whether

it would make Google more likely to emerge as the online platform adopted by

everyone.