'''Reed's law''' is the assertion of [[David P. Reed]] that the [[utility]] of large [[wiktionary:Network|networks]], particularly [[social network]]s, can [[exponential growth|scale exponentially]] with the size of the network.
The reason for this is that the number of possible sub-groups of network participants is 2<mathsup>2^''N - N - 1 \, ''</mathsup> − ''N'' − 1, where <math>''N</math>'' is the number of participants. This grows much more rapidly than either
* the number of participants, <math>''N</math>'', or
* the number of possible pair connections, <math>\frac{''N''(''N-'' − 1)}{2}</math>2 (which follows [[Metcalfe's law]]).
so that even if the utility of groups available to be joined is very small on a peer-group basis, eventually the [[network effect]] of potential group membership can dominate the overall economics of the system.
==Derivation==
Given a [[Set (mathematics)|set]] ''A'' of ''N'' people, it has 2<mathsup> 2^''N ''</mathsup> possible subsets. This is not difficult to see, since we can form each possible subset by simply choosing for each element of ''A'' one of two possibilities: whether to include that element, or not.
However, this includes the (one) empty set, and ''N'' [[Singleton_Singleton (mathematics)|Singleton]]s, which are not properly subgroups. So 2<mathsup> 2^''N - N - 1 ''</mathsup> − ''N'' − 1 subsets remain, which is exponential, like 2<mathsup> 2^''N ''</mathsup>.
==Quote==
From David P. Reed's, "The Law of the Pack" (Harvard Business Review, February 2001, pp 23-423–4):<!--Not a proper reference citation; please use <ref name"SomethingUniqueHere">{{Cite book|...}}</ref>.-->
:"[E]ven Metcalfe's Lawlaw understates the value created by a group-forming network [GFN] as it grows. Let's say you have a GFN with ''n'' members. If you add up all the potential two-person groups, three-person groups, and so on that those members could form, the number of possible groups equals 2<mathsup>2^''n''</mathsup>. So the value of a GFN increases exponentially, in proportion to 2<mathsup>2^''n''</mathsup>. I call that Reed's Law. And its implications are profound."
== See also ==
* [[Coase's penguin]]
* [[Social capital]]
* [[Beckstrom's_law |Beckstrom's Lawlaw]]
* [[Sarnoff's law]]
* [[Andrew Odlyzko]]'s "Content is Not King"
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