Sunday, March 24, 2013

Networked minds create a cooperative human species

In their computer simulations of human evolution, scientists at ETH Zurich find the emergence of the “homo socialis” with “other-regarding” preferences. 

The results explain some intriguing findings in experimental economics and call for a new economic theory of “networked minds”. 

Credit: © violetkaipa / Fotolia

Economics has a beautiful body of theory but does it describe real markets?

Doubts have come up not only in the wake of the financial crisis, since financial crashes should not occur according to the then established theories.

For some time economic theory has been based on concepts such as efficient markets and the “homo economicus”, i.e. the assumption of competitively optimising individuals and firms.

It was believed that any behaviour deviating from this would create disadvantages and, hence, be eliminated by natural selection.

But experimental evidence from behavioural economics show that, on average, people behave more altruistically ('fairness-oriented' and 'other-regarding') than expected. A new theory by scientists from ETH Zurich now explains why.

“We have simulated interactions of individuals facing social dilemma situations, where it would be favourable for everyone to cooperate, but non-cooperative behaviour is tempting,” explains Dr. Thomas Grund, one of the authors of the study.

“Hence, cooperation tends to erode, which is bad for everyone.” This may create tragedies of the commons such as over-fishing, environmental pollution, or tax evasion.

Evolution of “friendliness”
Prof. Dirk Helbing of ETH Zurich, who coordinated the study, adds: “Compared to conventional models for the evolution of social cooperation, we have distinguished between the actual behaviour – cooperation or not – and an inherited character trait, describing the degree of 'other-regarding' preferences, which we call the friendliness.”

The actual behaviour considers not only the own advantage (“payoff”), but also gives a weight to the payoff of the interaction partners depending on the individual friendliness.

For the “homo economicus”, the weight is zero. The friendliness spreads from one generation to the next according to natural selection. This is merely based on the own payoff, but mutations happen.

For most parameter combinations, the model predicts the evolution of a payoff-maximizing “homo economicus” with selfish preferences, as assumed by a great share of the economic literature.

(Homo socialis is subjected to society, is a part of it.)

Very surprisingly, however, biological selection may create a “homo socialis” with 'other-regarding' preferences. In such a case, clusters of friendly people, who are “conditionally cooperative”, may evolve over time.

If an unconditionally cooperative individual is born by chance, it may be exploited by everyone and not leave any offspring.

However, if born in a favourable, conditionally cooperative environment, it may trigger cascade-like transitions to expand cooperative behaviour, such that 'other-regarding' behavior pays off. #

Networked minds create a cooperative human species

“This has fundamental implications for the way, economic theories should look like,” states Professor Helbing.

Most of today’s economic knowledge is for the “homo economicus”, but people wonder whether that theory really applies.

A comparable body of work for the “homo socialis” still needs to be written. While the “homo economicus” optimizes its utility independently, the “homo socialis” puts himself or herself into the shoes of others to consider their interests as well,” explains Grund

Helbing adds: “This establishes something like “networked minds”. Everyone’s decisions depend on the preferences of others.” This becomes even more important in our networked world.

A participatory kind of economy

How will this change our economy? Today, many customers doubt that they get the best service by people who are driven by their own profits and bonuses.

“Our theory predicts that the level of 'other-regarding' preferences is distributed broadly, from selfish to altruistic. Academic education in economics has largely promoted the selfish type.

Perhaps, our economic thinking needs to fundamentally change, and our economy should be run by different kinds of people,” suggests Grund.

“The true capitalist has 'other-regarding' preferences,” adds Helbing, “as the “homo socialis” earns much more payoff.”

This is, because the “homo socialis” manages to overcome the downwards spiral that tends to drive the “homo economicus” towards tragedies of the commons.

The breakdown of trust and cooperation in the financial markets in 2008would be seen as good example.

“Social media will promote a new kind of participatory economy, in which competition goes hand in hand with cooperation,” believes Helbing.

Indeed, the digital economy’s paradigm of the “prosumer” states that the Internet, social platforms, 3D printers and other developments will enable the co-producing consumer.

“It will be hard to tell who is consumer and who is producer”, says Christian Waloszek. “You might be both at the same time, and this creates a much more cooperative perspective.”

Thursday, March 21, 2013

Metasploit - Entire Internet probed for insecure devices - Millions Discovered

A surreptitious scan of the entire internet has revealed millions of printers, webcams and set-top boxes protected only by default passwords.

An anonymous researcher used more than 420,000 of these insecure devices to test the security and responsiveness of other gadgets, in a nine-month survey.

Using custom-written code, they sent out more than four trillion messages.

The net's current addressing scheme accommodates about 4.2 billion devices. Only 1.3 billion addresses responded.

The number of addresses responding was a surprise as the pool of addresses for that scheme has run dry.

As a result, the net is currently going through a transition to a new scheme that has a vastly larger pool of addresses available.

The scan found half a million printers, more than one million webcams and lots of other devices, including set-top boxes and modems, that still used the password installed in the factory, letting almost anyone take over that piece of hardware. Often the password was an easy to guess word such as "root" or "admin".

"Whenever you think, 'That shouldn't be on the internet, but will probably be found a few times,' it's there a few hundred thousand times," wrote the un-named researcher in a paper documenting their work.

HD Moore, creator of Metasploit, carried out a similar survey in 2012, said the results looked "pretty accurate".

He added he had seen malicious hackers exploiting the security failings of these devices to run criminal networks known as botnets that are used to send out spam, mount phishing attacks and bombard websites with deluges of data.

Monday, March 18, 2013

Telecom User Trends: Text messaging plunges in popularity

The number of text messages sent by people with a Dutch mobile phone contract fell last year by 27% as free alternatives such as Whatsapp made inroads, according to telecom watchdog Opta in its annual report.

At the same time, mobile internet traffic rose by 42% to an average of 182 Mb a month in 2012, Opta's annual report shows.

Despite the rise in free services, the amount of time spent making mobile phone calls was virtually unchanged at an average of 97 minutes a month.

Opta also said Switzerland has now overtaken the Netherlands in terms of broadband connection density. Switzerland now has 42 internet connections per 100 people, compared with 39 per 100 in the Netherlands.

Saturday, March 16, 2013

TED Talk: Amanda Palmer - The Art of Asking - Video

Don't make people pay for music, says Amanda Palmer. Let them. In a passionate talk that begins in her days as a street performer (drop a dollar in the hat for the Eight-Foot Bride!), she examines the new relationship between artist and fan.

TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world's leading thinkers and doers give the talk of their lives in 18 minutes (or less).

Thursday, March 7, 2013

FROST: Forensic Recovery Of Scrambled Telephones

Freezing an Android phone can help reveal its confidential contents, German security researchers have found.

The team froze phones for an hour as a way to get around the encryption system that protects the data on a phone by scrambling it.

Google introduced the data scrambling system with the version of Android known as Ice Cream Sandwich.

The attack allowed the researchers to get at contact lists, browsing histories and photos.

Cold start 
Android's data scrambling system was good for end users but a "nightmare" for law enforcement and forensics workers, the team at Erlangen's Friedrich-Alexander University (FAU) wrote in a blogpost about their work.

To get around this, researchers Tilo Muller, Michael Spreitzenbarth and Felix Freiling from FAU put Android phones in a freezer for an hour until the device had cooled to below -10C.

The trio discovered that quickly connecting and disconnecting the battery of a frozen phone forced the handset into a vulnerable mode.

This loophole let them start it up with some custom-built software rather than its onboard Android operating system. The researchers dubbed their custom code Frost - Forensic Recovery of Scrambled Telephones.

The Frost software helped them copy data on a phone that could then be analysed on a separate computer.

A chilled phone also helped their hacking project. Data fades from memory much more slowly when chips are cold which allowed them to grab the encryption keys and speed up unscrambling the contents of a phone.

PhD student Tilo Muller told the BBC that the attack generally gave them access to data that had been put in memory as users browsed websites, sent messages or shared pictures.

The researchers tested their attack against a Samsung Galaxy Nexus handset as it was one of the first to use Android's disk encryption system. However, they said, other phones were just as likely to be vulnerable to the attack. The team are planning further tests on other Android handsets.

While the "cold boot" attack had been tried on desktop PCs and laptops, Mr Muller said the trio were the first to try it on phones.

"We thought it would work because smartphones are really small PCs," he said. "but we were quite excited that the trick with the freezer worked so well."

The German research group is now working on defences against the attack that ensures encryption keys are never put in vulnerable memory chips. Instead they are only used in the memory directly attached to a phone's processor.

UK Financial Scams: A Growth Industry

"Trust me, I'm a financial adviser!"

The Financial Scams is one industry that is still growing rapidly, showing no sign of reccession. These range from the sophisticated to the downright weird – but all have the same aim: to relieve you of your money.

Recent figures from the National Fraud Authority show that the total lost to individuals from fraud and other scams is more than £6bn a year.

Here are the top 10 scams to watch out for this year (beware, there are more!);

1 Rare metals
Rare earth metals are chemical elements such as scandium and yttrium which are used in the manufacture of computers and phones.

The Financial Services Authority (FSA) warns that companies are using high-pressure sales tactics and are targeting vulnerable customers out of the blue who are often told that supply of these metals is falling, causing prices to rise.

The FSA said it had “yet to see any convincing evidence that there is a viable market for investors to make money from investments in rare earth metals”.

It says that manufacturers using these metals buy in quantity: so they are not likely to want to buy from small independent companies.

2 Pension liberation fraud
Victims are told they can release their pension funds built up before they reach 55 years old. The Pensions Regulator warns that accessing pension savings before minimum pension age is only possible in rare cases, such as terminal illness.

It says that entering into a pension liberation scheme “can be fraudulent where individuals are not informed, or are misled, as to the consequences of entering into one of these schemes”.

It says these schemes can result in tax charges and penalties of more than half the value of a member’s pension savings – and victims are seldom told about these costs.

In the UK it is possible to get 25pc from your pension as tax-free cash. For more information check with your pension provider or a legitimate and FSA registered financial adviser.

3 Mobility aids
Scams targeting elderly people have raked in more than £28m in three years. The Insolvency Service said that around 2,000 elderly people were victims of scams ranging from dodgy investments to companies selling unsuitable or overpriced mobility scooters and stairlifts.

The scam involves selling these aids on the telephone or at home to elderly people with salesmen not coming off the phone until the sale is closed.

These scams can be avoided by only dealing with reputable companies which do not pressurise clients and allow them the chance to consider a deal before paying up.

4 Dodgy job offers
This scam involves victims being attracted by fake job offers which effectively turn them into money launderers.

Financial Fraud Action UK says the offers use titles such as “money transfer agent” or “payment processing agent”.

Those who succumb become part of a money-laundering scheme and are known to authorities as “money mules”.

They are told to receive money into their bank accounts and to transfer it to another, taking a cut themselves.

The money involved is often stolen or the proceeds of drug dealing and extortion. The mules are used to move the money offshore into overseas accounts.

5 Lotteries
Lottery scams remain common, according to Which?, the consumer group. One of the scams seen by Which? purported to come from the International Monetary Fund, which promised the recipient $8m if they paid £960 to release the funds.

It’s easy to tell a lottery scam. You have to buy a ticket to have a chance of winning a lottery. If you haven’t, you can’t win.

6 Truancy fraud
Essex County Council warned last month that a parent of a pupil in one of its schools received a phone call purporting to be from the Education Welfare Service.

The parent was told that as their child had not attended school that day they would be fined £340 and they were asked to give their card details over the phone.

The council pointed out that the Education Welfare Service does not phone parents demanding payment over the phone: it sends penalty notices by post and it would not phone parents demanding immediate payment.

7 Wine scams
These are a growing concern, says the Insolvency Service. According to Decanter magazine, scammers posing as buyers have attempted to defraud suppliers of around £1.6m since May 2011.

Individuals have also been hit by scammers selling en-primeur wine. This is wine that is sold while it is still in the barrel.

Victims are told they are buying wine at this stage because it will rise in value, by fraudsters posing as wine merchants.

Unfortunately, the wine doesn’t exist, and the victims are left out of pocket.

8 Love
According to Action Fraud, there is an increase in romance scams. It has had more than 1,000 reports in the past 12 months from those who believe they have found love online but have actually become victims of criminals who want to relieve them of their money.

The typical victim has been conned out of £21,600. This scam works when those involved hand over useful personal and financial details about themselves to people they have fallen for online.

Anyone looking for love online should watch out for basic warning signs. Be cautious of unsolicited advances, especially if they have too much interest in your personal details and bank accounts.

9 Landbanking
This involves companies which divide land up into smaller plots to sell to cold-called investors on the basis that once the land becomes available for development, it will rise in value but the FSA said the land is often in areas of natural beauty or historical interest and there is little chance of it ever being given permission for developers to build on.

One plot of land recently sold was on a site of special scientific interest; another was on a slope too steep to be built on. The FSA said landbanking schemes had cost investors up to £200m.

In extreme forms scammers can sell plots of land anywhere in the world and have also been known to sell plots on the Moon!

10 Carbon credit trading
Carbon credits are certificates or permits which represent the right to emit one ton of carbon dioxide, and they can be traded. They are little understood by the general public, even when they are legitimately traded among corporations.

This Carbon credit trading scam involves cold callers targeting investors to buy into the “new big thing” in commodity trading because industries have to offset their emissions.

Carbon credits can be sold and traded legitimately, and the FSA pointed out that there were many reputable firms operating in the sector.

Investors might find they cannot sell their investment or get a competitive rate because they only have a few credits to trade.

Never trade in any commodity or venture that you do not understand or have not 'fully' studied and researched. Get references, visit sites and talk to existing customers. Caveat Emptor!