Beckstrom's Law
Beck current law (English: Beckstrom's law ) is a model, or theorem , which takes place in the economics application and Rod Beckstrom (* 1961) back. The theorem is based on the intention of finding an answer to the decades-old question about the value of networks. In summary, the theorem states that the value of a network is equal to the net value of the transactions made by each user within the network, summed up over the number of all users.
According to Rod Beckstrom, the theorem can be used to measure the value of any network, including social networks, self-help groups, or even the internet as a whole. In the newly introduced model, the value of a network is revealed by considering all transactions carried out by the network and the resulting additional benefits for its users.
One way of determining the usefulness of the network the theorem mentions is to ask what additional transaction costs or losses would arise if the network ceased to exist. To illustrate this, a comparison is made with a pizza delivery service and its benefits for customers are discussed. In the event that the said pizza delivery service is not continued, the social benefit that arises from the delivery of the pizzas decreases, and the customers of the delivery service either have to look for another service or stay hungry.
Beckstrom's law differs from other theorems such as Metcalfe's law , Reed's law, and similar theorems in that the value of the network is not based solely on the size of the network, or in the case of Metcalfe's law, on another variable.
Rod Beckstrom cites the applicability of his theorem to new realities in the context of Internet use as a decisive advantage of his theorem over Metcalfe's law. This is mainly because Metcalfe's law does not take into account any deterioration in the service offered due to a high number of users or the appearance of harmful actors who steal the network's values.
Mathematical model
The net value V of a network j for any user i is equal to the sum of the net values of the benefits of all transactions minus the net costs of all transactions of the network within a certain time period t , as illustrated in the following equation. The value of the entire network is a summary of the value of all users. The latter are defined as the individuals, or units, that carry out transactions using the network.
- With:
= Value of network j for all users
V i , j = net value of all transactions for user i with respect to network j , over any time period
i = identifier for a user of the network
j = identifier of a network
k = identifier of a transaction
B i , j , k = the value of transaction k for user i with respect to network j
C i , j , k = the cost of transaction k to user i in relation to network j
r k = the interest discount factor up to time k
t k = elapsed time in years to transaction k n = number of users m = number of transactions
Areas of application in everyday life
Beckstrom's Law provides an understanding of how dynamics within groups influence the experiences of individual individuals. To the extent that users use services that are funded by a group of individuals, each member of the group contributes to the provision of the services. An increase in the number of members of the group means that more individuals contribute to the funding of the services provided. On the other hand, however, the increased number of actors can also lead to delays and a deterioration in the provision of services for the group. For example, the turnover of a golf club increases with the addition of more members, but the increased number of members can simultaneously lead to overcrowding of the golf courses and delays in normal operations. This negatively affects the individual's experience on the golf course. Using the model developed by Beckstrom, it can now be determined up to what point additional members increase the overall benefit of the golf club, or from what number of members an additional member has a negative effect on the benefit of the entire group.