We present data and argument to show that in Tetris-a real-time, interactive video game-certain cognitive and perceptual problems ore more quicktv, easily, and reliably solved by performing actions in the world than by performing com-putational actions in the head atone. We have found that some of the translations and rotations made by players of this video game are best understood as actions that use the world to improve cognition. These actions are not used to implement a plan, or to implement a reaction; they are used to change the world in order to simplify the problem-solving task. Thus, we distinguish pragmatic octions--actions performed to bring one physically closer to a goal-from epistemic actions-actions performed to uncover informatioan that is hidden or hard to compute mentally. To illustrate the need for epistemic actions, we first develop a standard information-processing model of Tetris cognition and show that it cannot explain performance data from human players of the game-even when we relax the assumption of fully sequential processing. Standard models disregard many actions taken by players because they appear unmotivated or superfluous. How-ever, we show that such actions are actually far from superfluous; they play a valuable role in improving human performance. We argue that traditional accounts are limited because they regard action as having o single function: to change the world. By recognizing a second function of action-an epistemic func-tion-we can explain many of the actions that a traditional model cannot. Al-though our argument is supported by numerous examples specifically from Tetris, we outline how the new category of epistemic action can be incorporated into theories of action more generally. In this article, we introduce the general idea of an epistemic action and discuss its role in Tetris, a real-time, interactive video game. Epistemic actions-physical actions that make mental computation easier, faster, or more We thank Steve Haehnichen for his work on the initial implementations of Tetris and

There have been many claims that the Internet represents a new nearly “frictionless market. ” Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products—books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets. We find that prices on the Internet are 9–16 % lower than prices in conventional outlets, depending on whether taxes, shipping, and shopping costs are included in the price. Additionally, we find that Internet retailers ’ price adjustments over time are up to 100 times smaller than conventional retailers ’ price adjustments—presumably reflecting lower menu costs in Internet channels. We also find that levels of price dispersion depend importantly on the measures employed. When we compare the prices posted by different Internet retailers we find substantial dispersion. Internet retailer prices differ by an average of 33 % for books and 25 % for CDs. However, when we weight these prices by proxies for market share, we find dispersion is lower in Internet channels than in conventional channels, reflecting the dominance of certain heavily branded retailers. We conclude that while there is lower friction in many dimensions of Internet competition, branding, awareness, and trust remain important sources of heterogeneity among Internet retailers.

Information foraging theory is an approach to understanding how strategies and technologies for information seeking, gathering, and consumption are adapted to the flux of information in the environment. The theory assumes that people, when possible, will modify their strategies or the structure of the environment to maximize their rate of gaining valuable information. The theory is developed by (a) adaptation (rational) analysis of information foraging problems and (b) a detailed process model (adaptive control of thought in information foraging [ACT-IF]). The adaptation analysis develops (a) information patch models, which deal with time allocation and information filtering and enrichment activities in environments in which information is encountered in clusters; (b) information scent models, which address the identification of information value from proximal cues; and (c) information diet models, which address decisions about the selection and pursuit of information items. ACT-IF is instantiated as a production system model of people interacting with complex information technology. Humans actively seek, gather, share, and consume information to a degree unapproached by other organisms. Ours might properly be characterized as a species of informavores (Dennett, 1991). Our adaptive success depends to a large extent on a vast and complex

As the Internet develops into a robust channel for commerce, it will be important to understand the characteristics of electronic markets. Businesses, consumers, government regulators, and academic researchers face a variety of questions when analyzing these nascent markets. Will electronic markets have less friction than comparable conventional markets? What factors lead to dispersion in Internet prices? What are the major electronic commerce developments to watch in the coming years? This paper addresses these questions by reviewing current academic research, discussing the implications of this research, and proposing areas for future study. We review evidence that Internet markets are more efficient than conventional markets with respect to price levels, menu costs, and price elasticity. However, several studies find substantial and persistent dispersion in prices on the Internet. This price dispersion may be explained, in part, by heterogeneity in retailer-specific factors such as ...

The Internet has the potential to significantly reduce search costs by allowing consumers to engage in low-cost price comparisons online. This paper provides empirical evidence that the rise of Internet comparison sites for life insurance has had a major impact on prices in the 1990s. Using micro data on life insurance policies, the results indicate that, controlling for individual and policy characteristics, a 10 percent increase in the share of individuals using the Internet reduced average prices for the group by up to 5 percent. Rising Internet usage does not lower prices for policies types that are not covered by the websites nor does it appear to lower prices in the period before the insurance sites came online. Overall growth of the Internet has reduced term life prices by 8 to 15 percent and increased consumer surplus by at least $115-215 million per year and perhaps as much as $1 billion. The results also show that the introduction of the Internet search sites is associated with an increase in price dispersion within demographic groups but that as the share of people using the technology rises further, dispersion falls.

Several authors have argued that because modern computing and communications technologies reduce buyer search costs and other market inefficiencies, there should be intense price competition between sellers in electronic markets. This paper examines this prediction using data on the airline ticket offerings of online travel agents (OTA). We find that different OTAs offer tickets with substantially different prices and characteristics when given the same customer request. Some of this variation appears to be due to product differentiation -- different OTAs specialize by systematically offering different tradeoffs between ticket price and ticket quality (minimizing connections, depart or return when requested). However, even after accounting for differences in ticket quality, ticket prices vary by as much as 18% across OTAs. In addition, OTAs return tickets that are strictly inferior to the ticket offered by another OTA for the same request between 2.2% and 28% of the time suggesting tha...

. Shopbots are agents that search the Internet for information pertaining to the price and quality of goods or services. With the advent of shopbots, a dramatic reduction in search costs is imminent, which promises (or threatens) to radically alter market behavior. This research includes the proposal and theoretical analysis of a simple economic model which is intended to capture some of the essence of shopbots, and attempts to shed light on their potential impact on markets. Moreover, experimental simulations of an economy of software agents are described, which are designed to model the dynamic interaction of electronic buyers, sellers, and shopbots. This study forms part of a larger research program that aims to provide new insights on the impact of agent and information technology on the nascent information economy. 1 Introduction Shopbots, agents that automatically search the Internet for goods and services on behalf of consumers, herald a future in which autonomous agents become...

The World Wide Web possesses unique characteristics which distinguish it in important ways from traditional commercial communications environments. Because the Web presents a fundamentally different environment for marketing activities than traditional media, conventional marketing activities are becoming transformed, as they are often difficult to implement in their present form. In this paper, we discuss the idea that these changes portend an evolution in the "marketing concept" and argue that in order for marketing efforts to be successful in this new medium, a new business paradigm is required. In this new approach, the marketing function must be reconstructed to facilitate electronic commerce in the emerging electronic society underlying the Web. 2 A New Marketing Paradigm for Electronic Commerce The World Wide Web, the first and current networked global implementation of a hypermedia computer-mediated environment (CME), is increasingly being recognized as an important emerging...

The fundamental goal of all good design and engineering is to create maximal value added for any given investment. There are many dimensions in which value can be assessed, from monetary profit to the solution of social problems. The benefits sought are often domain-specific, yet the logic is the same: design is an investment activity. Software economics is the field that seeks to enable significant improvements in software design and engineering through economic reasoning about product, process, program, and portfolio and policy issues. We summarize the state of the art and identify shortfalls in existing knowledge. Past work focuses largely on costs, not on benefits, thus not on value added; nor are current technical software design criteria linked clearly to value creation. We present a roadmap for research emphasizing the need for a strategic investment approach to software engineering. We discuss how software economics can lead to fundamental improvements in software design and engineering, in theory and practice. 1

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