NBER market design workshop at Stanford, tomorrow and Saturday

 Tomorrow and Saturday, market design at Stanford...

NBER Market Design Working Group Meeting, Fall 2024   DATE October 18-19, 2024

LOCATION SIEPR, Stanford University, Koret-Taube Conference Center, 366 Galvez Street

ORGANIZERS Michael Ostrovsky and Parag A. Pathak

  Format: 35 minute presentation, followed by 10 minute discussion.

Friday, October 18

9:00 am Continental Breakfast

9:30 am Designing Dynamic Reassignment Mechanisms: Evidence from GP Allocation, Ingrid Huitfeldt, University of Oslo, Victoria Marone, University of Texas at Austin and NBER, Daniel C. Waldinger, New York University and NBER

10:15 am Dynamic Matching with Post-allocation Service and its Application to Refugee Resettlement, Kirk C. Bansak, University of California, Berkeley, Soonbong Lee, Yale University, Vahideh Manshadi, Yale University, Rad Niazadeh, University of Chicago, Elisabeth Paulson, Harvard University

11:00 am  Break

11:30 am  Social Learning in Lung Transplant Decisions, Laura Doval, Columbia University, Federico Echenique, University of California, Berkeley, Wanying Huang, Monash University, Yi Xin, California Institute of Technology

12:15 pm  Endogenous Priority in Centralized Matching Markets: The Design of the Heart Transplant Waitlist, Kurt R. Sweat, Johns Hopkins University

1:00 pm Lunch

2:00 pm  Mechanism Reform: An Application to Child Welfare, E. Jason Baron, Duke University and NBER, Richard Lombardo, Harvard University, Joseph P. Ryan, University of Michigan, Jeongsoo Suh, Duke University, Quitze Valenzuela-Stookey, University of California, Berkeley

2:45 pm  The Competitive Core of Combinatorial Exchange, Simon Jantschgi, University of Oxford, Thanh T. Nguyen, Purdue University, Alexander Teytelboym, University of Oxford

3:30 pm  Break

4:00 pm  "Bid Shopping" in Procurement Auctions with Subcontracting(slides), Raymond Deneckere, University of Wisconsin-Madison, Daniel Quint, University of Wisconsin-Madison

4:45 pm Ads in Conversations: Market Thickness and Match Quality, Martino Banchio, Bocconi University, Aranyak Mehta, Google Research, Andres Perlroth, Google Research

5:30 pm Adjourn

7:00 pm  Group Dinner  Il Fornaio Palo Alto, 520 Cowper Street, Palo Alto, CA

Saturday, October 19

8:30 am Continental Breakfast

9:00 am Dynamic Auctions with Budget-Constrained Bidders: Evidence from the Online Advertising Market, Shunto J. Kobayashi, Boston University, Miguel Alcobendas, Yahoo Research

9:45 am The Welfare Effects of Sponsored Product Advertising, Chuan Yu, Harvard University

10:30 am Break

11:00 am An Empirical Analysis of the Interconnection Queue, Sarah Johnston, University of Wisconsin-Madison, Yifei Liu, University of Wisconsin-Madison, Chenyu Yang, University of Maryland

11:45 am  Iterative Network Pricing for Ridesharing Platforms Chenkai Yu, Columbia University, Hongyao Ma, Columbia University

12:30 pm  Lunch and Adjourn

Vacuum-tube valley

 Silicon valley didn't transition directly from fruit orchards to silicon chips.  Vacuum tubes took center stage for a while.

Here's a California historical landmark on the NE corner of Emerson Street and Channing Avenue in Palo Alto, commemorating the Federal Telegraph Company, founded by radio/electronics pioneer Cyril Frank Elwell (August 20, 1884 – 1963), who graduated from Stanford in 1907.

Scott Kominers on entrepreneurial market design (podcast)

 Scott Kominers is interviewed on the Things to Know podcast, about the arc of his career, and how it led him to market design, and crypto, NFTs, and beyond.

"Market design is a sort of wrapper around economics..."

 

Market design, redesigned (in startups and university labs)

Market design is evolving, and new ways of organizing it are being explored. 

In my post yesterday, I talked about the early work on school choice that Atila Abdulkadiroglu, Parag Pathak, Tayfun Sonmez and I did under the auspices of Boston schools Superintendent Tom Payzant. The market design by economists in Boston, as with the earlier successful effort in New York City, was conducted as part of our research work as professors.  Not a penny changed hands, and we all felt good about that.

But if there was a flaw in that working arrangement, it was that no contracts were signed, and so as staff turnover took place in school districts, and the individuals we had dealt with departed, the district's institutional memory eroded, and they didn't always remember to turn to us when difficulties arose that we could have helped them with. Partly to address that, and to have at least one person able to devote time to approaching school districts, Parag and Atila and I supported Neil Dorosin in founding the non-profit  Institute for Innovation in Public School Choice, which during its lifetime helped school choice in a number of American cities, including Denver, New Orleans, and Washington D.C.

Parag and Atila went on to be founding members of MIT's School Effectiveness and Inequality Intiative, which just this week was "relaunched" with a different team as MIT Blueprint Labs, which aims to build on MIT's strengths not just in school choice but in a much wider area of market design and policy analysis, and to be a lab with a large staff and extensive fundraising:

Launch announcement of MIT Blueprint Labs

Featuring

Professor Parag Pathak Faculty Director MIT SEII / Blueprint Labs Research spotlight: K-12 education

Professor Joshua Angrist Faculty Director MIT SEII / Blueprint Labs Research spotlight: Higher education and the workforce

Professor Nikhil Agarwal Faculty Director, Health Care MIT SEII / Blueprint Labs Research spotlight: Health care

Eryn Heying Executive Director MIT SEII / Blueprint Labs

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Update: and here's the Blueprint Labs new (announced Aug. 11) website: https://blueprintlabs.mit.edu/

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In a related development, Parag has cofounded a new for-profit Ed-tech startup called Avela, that plans to spread the technologies he's helped pioneer.  A for-profit firm has some funding, employment and investing opportunities that aren't available to non-profits or university labs, let alone to teams of professors organized informally. And as in the Blueprint Lab, they hope that the tools they will develop will be readily applicable to quite a broad range of matching markets and market designs.

***************

These various efforts look to me like design experiments themselves, in the search for sustainable ways of making market design a permanent part of not only the research that economists do, but of the practical effects we hope to foster.

Observing all this from the West Coast, and over several decades, I can't help noticing that these institutional changes have been accompanied by team changes, and shifting collaborations among market designers.  

There are also a growing number of different kinds of economists (and computer scientists, operations researchers and businesses) involved in designing and assessing markets, and market design has not only changed markets, but changed the way economists work, in many small and large ways.  Econometricians and development economists have led the way in organizing large labs, and market design may be heading in that direction as well. Big and small tech firms have also started to think of market design as among their core competencies, and as a discipline they should be hiring.

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Here in California, I'd be remiss if I didn't mention that my colleague Paul Milgrom has for a long time engaged in auction design through his for-profit company Auctionomics.

And Susan Athey is the faculty director of a big lab at Stanford using different technologies in other areas of market design:  the Golub Capital Social Impact Lab, which describes itself this way:

"We use digital technology and social science research to improve the effectiveness of leading social sector organizations.

"Based out of Stanford GSB, the lab is a research initiative of affiliated academics and staff, as well as researchers and students, who are passionate about conducting research that guides and improves the process of innovation.

"Research Approach

We collaborate with a wide range of organizations, from large firms to smaller startups, for-profits to nonprofits, and NGOs to governments, to conduct research. Then, we apply and disseminate our insights to achieve social impact at large scale."

Financing drug discovery

 Bloomberg has a nice story about financial innovation in funding drug discovery startups:

Out of Grief, MIT’s Andrew Lo Invented a Better Way to Finance Biomedical Innovation.  A company he inspired, BridgeBio Pharma, is worth $9 billion and is creating cures for orphan diseases   by Peter Coy

"The main factor in the dearth of financing, Lo realized, was the lack of diversification. Let’s say a drug costs $200 million to develop and has only a 5% chance of success. If it does succeed after 10 years of development, it could earn $2 billion a year annually for 10 years. Intriguing, but too much of a lottery ticket for most investors. 

"But what if you could raise $30 billion to fund 150 startups at once? If the success of each was independent—that is, uncorrelated with the success of any other drug in the portfolio—then the chance of at least three becoming blockbusters was 98% and the chance of at least five becoming blockbusters was 87%. Those odds were so attractive, Lo realized, that even conservative fixed-income investors who like single-A-rated bonds would be willing to finance such a fund.

"Lo had been lecturing and publishing papers along these lines for several years when a former student, Neil Kumar, told him he wanted to put Lo’s ideas into practice in a company that would focus on treatments for orphan diseases caused by single-gene defects and cancers with clear genetic drivers. It was a perfect test of the concept because each rare disease was unique; their causes were uncorrelated, as in Lo’s thought experiment.

"Lo made a small investment and was listed as a co-founder of what became BridgeBio Pharma Inc. in Palo Alto, Calif. According to Bloomberg data, the company had a market value of $9.3 billion as of Feb. 4, making Kumar’s 5.6% stake worth more than $500 million. In the webinar, Lo said, “I’m most proud of the fact that they have 20 projects of which four are in Phase 3 trials.” The company anticipates approval of one by the end of 2021 and another by the end of 2022, he said, adding, “These are therapies that would not have been developed” if not for BridgeBio."

Cognomos--course allocation software by Eric Budish et al.

Cognomos is a site that will put school administrators in touch with the designers of  Wharton's Course Match, which I've blogged about here and here with links to the underlying academic papers.

You can hear Eric Budish talk about it in the videos below.

Reading for marketplace designers from Andreessen Horowitz

Scott Kominers forwards this interesting reading list (which includes a nice summary of market design by him and Tom Eisenmann):

Reading for Marketplace Entrepreneurs

It appears on the Andreessen Horowitz website https://a16z.com/marketplace-100/ , which is well worth a look for those interested in starting a marketplace company, or maintaining one.

Amazon as a safe market-space for Hasidic business-NYT

The NY Times has the story about how Amazon is a good place to do business, if you don't like to leave home:

How Amazon Has Transformed the Hasidic Economy

"Amazon has become a lucrative place to do business for many Hasidic Jews, offering anonymity to a largely insular community and allowing women to work from home.
...
"The ability to sell merchandise easily and relatively anonymously on Amazon has transformed the economies of Hasidic enclaves in Brooklyn, suburban New York and central New Jersey, communities where members prefer to keep to themselves and typically do not go to college, let alone graduate from business programs.

But Amazon allows Hasidim to start selling without much experience and without making the investments required by a brick-and-mortar store. It permits Hasidic sellers to deal with the public invisibly — almost entirely by mail, by email or through package-delivery firms."

Economics in the Age of Algorithms, Experiments, and A.I., in Seattle

The NABE Tech Economics Conference, Career Fair and Expo will be on the theme   Economics in the Age of Algorithms, Experiments, and A.I.,  tomorrow and Thursday, November 15-16 in Seattle.

I'll speak at lunch tomorrow, on

Marketplaces and Market Design - Matching Markets and Kidney Exchange

Here's the program.

Sven Seuken appointed Chief Economist of BandwidthX

Here's the press release:

BandwidthX Appoints Sven Seuken as Chief Economist
Prof. Seuken’s appointment underlines the importance of market design in BxMarket

"BandwidthX, the operator of the cloud-based mobile data market, today announces Prof. Sven Seuken as its Chief Economist. Professor Seuken is one of the world's experts in electronic market design. He is a tenured Associate Professor of Computation and Economics at the University of Zurich in Switzerland where he supervises a team of seven PhD students and Postdocs, conducting research on market design topics. At BandwidthX, Professor Seuken enjoys a broad mandate including the design and analysis of market mechanisms and trading rules to drive new efficiencies in BxMarket. The appointment comes at an exciting moment as BandwidthX is expanding its platform across various data networks and global offerings.

"Professor Seuken holds a PhD in Computer Science from Harvard University. Since 2006, he has been conducting research on electronic market design. His main focus lies on designing marketplaces with complex combinatorial constraints. Applications he has worked on include peer-to-peer backup markets, electricity markets, matching markets, spectrum auctions, data markets, financial markets, cloud computing markets, and bandwidth markets.  Prof. Seuken has received several awards, including a Google Faculty Research Award, a Microsoft Research PhD Fellowship, and a Fulbright Fellowship."
...
"BandwidthX operates an advanced connection management service and a cloud-based marketplace where both Mobile Operators and Network Service Providers can define their value for data capacity in real time and are automatically matched when their values align. BxMarket gives the Mobile Operators incremental data capacity at lower cost, while allowing the Network Service Providers to profit from new revenue streams from their underutilized data networks. With this new form of micro-commerce, everyone in the mobile data ecosystem wins: from Mobile Operators and Network Service Providers to equipment and software vendors, aggregators and financial clearing companies and, of course, the end user of the device. Learn more about BandwidthX at http://www.bandwidthx.com.

Crowdfunding For IVF

NPR has a story which involves a combination of very modern transactions:
Please, Baby, Please: Some Couples Turn To Crowdfunding For IVF

"They began with a less costly and less invasive option: IUI or intrauterine insemination. That's where sperm is inserted with a catheter directly into the woman's uterus at the time of ovulation. The procedure costs, on average, just under $1,000 a try.
...

"The next step they took was to try in vitro fertilization, or IVF. This involves fertilizing eggs with sperm in a laboratory dish, then transferring the embryo into the woman's uterus. It can cost $15,000 to $20,000 each try.

"At first, Greg says, they thought about traveling overseas for more affordable treatments, but travel costs would have gobbled up any savings. So, they went online instead, to the crowdfunding site GiveForward. "

Genos seeks to make a market for personal genetic (whole exome) information

Genos is a new company that seeks to make a market for personal genetic information--it wants to both sell sequencing services to individuals, and then serve as a broker between the individuals who will still own their own data, and research projects that wish to use those data.

Here's an article in WIRED:

Genos Will Sequence Your Genes—And Help You Sell Them to Science

"The latest contender is Genos, a genetic sequencing startup that is unveiling its whole exome-sequencing service today. The hot, shiny object of the industry, this type of next-generation sequencing offers a complete profile of all the expressed genes (the ones that code for proteins) in your genome. While a growing number of targeted genetic testing kits are currently on the market (Color, Myriad, and 23andMe, to name a few), whole exome sequencing produces 50 to 100 times more data.
...
"In a first for the personal genomics movement, the company is creating a research pipeline with academic and commercial partners, and paying customers to donate their data. The incentives range between $50 and $200 per project; the first four include a vaccine for breast cancer, a clinical trial for treating lymphoma, and research into prion diseases and common neurological disorders."
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A market for information will have some interesting design issues, and a market for genetic information will have to navigate issues of repugnance as well. I'm on their advisory board.

Here's a press release.

Organjet versus regional transplant lists

Forbes discusses the unequal waiting times for deceased donor organs caused by the fact that transplant waiting lists are organized regionally.

Your New Liver Is Only A Learjet Away: First Of Three Parts

"Tayur’s initial business model for OrganJet was quite simple. OrganJet would charge a modest fee to help clients figure out which transplant programs would be likely to shorten their waiting time for an organ. Clients could then sign up to have access to an on-demand flight, in case one of those transplant programs called up with an available donor. Having a flight at ready disposal is critical because many transplant programs require patients to arrive within six hours after an organ becomes available, or they pass the organ on to the next person on the list. The six hour requirement exists because in organ transplantation, donor organs need to be placed into recipients in a timely manner or the organs accumulate irreversible damage. Thus, if a patient on the transplant waiting list in, say, Pittsburgh cannot make it there in time, the transplant team will call another candidate until it finds one that can make use of the organ.

Excited about his chance to address an important social problem, Tayur began working through the details of his business plan, issues such as how many jet companies he would need to contract with and how much money he would need to charge customers for a given flight. “I envisioned OrganJet as an opportunity to make some money and save some lives at the same time,” Tayur told me, words not that different from what honest medical school applicants would tell interviewers about their career choice. The fees he charged customers for these flights would not only cover the charge of paying for the pilots and the fuel, but would include a surcharge that would be the source of OrganJet’s profits.

Tayur was excited about his idea, but the more people he bounced his business plan off, the more pushback he received. In particular, many people told Tayur his idea would only promote greater unfairness in the transplant system, by further disadvantaging people who lacked the financial resources to pay for OrganJet’s services. Tayur thought he could minimize this problem by convincing health insurance companies to pay for the flights, but his critics pointed out that many low-income patients wouldn’t be able to afford such generous insurance.

Tayur realized his new company needed to become two new companies. He had already incorporated OrganJet as a nonprofit entity in May 2011. So in July of 2012 he started a second company, GuardianWings, a tax-exempt nonprofit that raises funds to cover flight costs for low-income patients. His vision was now clear – he would work to overcome geographic inequities in transplantation one patient at a time, giving everyone a fair shake at life-saving treatments even if they were not wealthy CEOs."
...
"Neither Medicare nor Medicaid currently pays for OrganJet’s services, and it is too early to tell whether private insurers will embrace OrganJet’s prices. Tayur, the CEO of OrganJet, is still negotiating with insurance companies on a case-by-case basis. He is also negotiating with large companies that self-insure their employees, presenting them with results of statistical analyses he has conducted which demonstrate that OrganJet’s services could save them money: “It would get their employees off dialysis sooner, not only improving their quality of life in the process, but also allowing them to return to work sooner, with greater productivity.”"

Peter Cramton is a Chief Economist

Peter Cramton puts on a new entrepreneurial market design hat, with Rivada Networks

Rivada Networks Names Peter Cramton as Chief Economist

"Rivada Networks has appointed Prof. Peter Cramton as its Chief Economist. Rivada CEO Declan Ganley said: “Professor Cramton is one of the world’s leading authorities on auction design.” Ganley added, “Rivada’s technology will turn wireless bandwidth into the world’s next great commodity. Peter’s expertise will ensure that wireless bandwidth trades in a competitive, state-of-the-art marketplace open to all stakeholders that seek access to wireless networks in the future.”

“Rivada’s technology allows us, for the first time, to create a truly open market for wireless bandwidth access, tearing down barriers to entry and permitting new business models and new entrants to emerge.”

"In his new role, Prof. Cramton will work with the Rivada team to design and development Rivada’s patented Telecommunication Commodity Exchange. Together with Rivada’s Dynamic Spectrum Arbitrage technology, the exchange will permit the buying and selling of capacity on LTE wireless networks in discrete units of both time and space.

“I am excited to bring my market design expertise to develop Rivada’s essential idea: an open access wireless market.”” Prof. Cramton said, “The bandwidth exchange lets wholesale operators efficiently trade spectrum in annual, monthly, and real-time auctions.” He continued: “Rivada’s technology allows us, for the first time, to create a truly open market for wireless bandwidth access, tearing down barriers to entry and permitting new business models and new entrants to emerge.”

Google buys Timeful from Yoav Shoham and Dan Ariely

Here's Timeful.  Here's Dan. Here's Yoav: This Stanford professor just sold his second startup to Google in less than 5 years.

Here's the Google announcement: Time is on your side—welcoming Timeful to Google
"Today we’re excited to announce that Timeful, Inc. is joining the Google family to help make getting things done in your life even easier. 

The Timeful team has built an impressive system that helps you organize your life by understanding your schedule, habits and needs. You can tell Timeful you want to exercise three times a week or that you need to call the bank by next Tuesday, and their system will make sure you get it done based on an understanding of both your schedule and your priorities. We’re excited about all the ways Timeful’s technology can be applied across products like Inbox, Calendar and beyond, so we can do more of the work for you and let you focus on being creative, having fun and spending time with the people you care about."

Conference on Auctions, Market Mechanisms and Their Applications (AMMA 2015)

Scott Kominers writes:

"Lirong Xia and I are co-organizing a new iteration of the Conference on Auctions, Market Mechanisms and Their Applications (AMMA 2015).

Any chance you could share this call for papers with your students, and maybe blogvertize it?"

The Third Conference on Auctions, Market Mechanisms and Their Applications

August 8–9, 2015

Chicago, Illinois, United States

HOME

COMMITTEES

• Organizing Committee
• Program Committee

CALL FOR PAPERS

AUTHOR INSTRUCTIONS

• Initial Submission

PRACTICAL INFORMATION

• Venues

CONTACT US

The Third Conference on Auctions, Market Mechanisms and Their Applications (AMMA 2015) 

 

• AMMA 2015 will be held August 8-9, 2015 at the University of Chicago's Becker Friedman Institute and Booth School of Business.

AMMA focuses on the economic, algorithmic, technical, and practical issues that arise in developing and deploying market mechanisms. This includes, but is not limited to, theoretical and empirical examination of questions like:

• Is a market the right mechanism for the problem? What are the externalities involved? What are the issues with central planning?
• How should novel markets be organized? What is the "right" micro-structure for a given setting?
• What is the best way to provide incentives? Is (real) money necessary?
• How do markets function in artificial economies (cf. bank runs in Second Life and similar games)?
• What protocols maximize the social value of market intermediaries?
• Is there a need for new mechanisms for specific applications?

In addition to more traditional academic papers, we are especially interested in papers presenting experiences from the real world (case studies and new applications). Below are some potential areas, but the list is illustrative rather than exhaustive -- we welcome papers in all areas of market design. Sample areas include:

• Content delivery networks
• Resource allocation in networks and distributed computing
• Online auctions and exchanges
• Markets and incentives in crowdsourcing
• Entrepreneurial market design
• Prediction markets
• Airport landing slot allocation
• Road congestion pricing
• School choice matching
• Organ exchange
• Social networks

• Financial market design
• Combinatorial auctions and exchanges

Papers can be submitted via EasyChair, at https://easychair.org/conferences/?conf=amma2015.

Deceased donor waiting times, and OrganJet

Here's an article by Daniela Lamas in the Atlantic on waiting times by region, and how to register at a transplant center outside of your home region:

A Private Jet Is Waiting to Take You to Your Kidney Transplant
"Waiting lists for donations can vary dramatically between cities--so OrganJet provides planes to fly patients to their new organs."

The article focuses on Sridhar Tayur, and OrganJet: my previous posts on OrganJet are here.

Making a market for "dark Wi-Fi"

Just as AirBnb makes a market for underused bedrooms, and Lyft makes a market for underused passenger seats in cars, BandwidthX seeks to make a market in underused ("dark") Wi-Fi, so that your phone provider can link you up through available Wi-Fi when you are on the move (and thus delay having to add expensive extra capacity). BandwidthX's 'dark Wi-Fi' capacity marketplace is in trials, says CEO 

Data for job matching might come from new sources--even video games

Catherine Rampell at the NY Times has the story, focusing on the startup Knack: Your Next Job Application Could Involve a Video Game

Venture capital looks at the design of marketplaces

Not long ago I had a chance to listen to some interesting presentations at a conference sponsored by Greylock Partners, about businesses that aim to make marketplaces: As Marketplaces Evolve, Greylock Places Its Bets

 Leena Rao writes:
"The idea of marketplaces as a business model for technology startups isn’t new. We saw some marketplaces go belly up in the bubble, and saw a few, like eBay, grow into massive businesses. However, the marketplace model has experienced a renaissance of sorts lately, with companies like Airbnb, Uber and others gaining serious traction and becoming billion-dollar-plus businesses.

Greylock Partners held a conference in mid-November devoted to talking about design, product development, the economics and more around marketplaces, spearheaded in part by the firm’s newest partner and former eBay Motors creator, Simon Rothman.

As part of its new $100 million commitment to investing in marketplaces, Greylock assembled Reid Hoffman, Airbnb co-founder and CEO Brian Chesky, eBay CEOJohn Donahoe, Nobel Prize Laureate and marketplace expert Alvin Roth, and many others to discuss the rise of marketplaces and much more. I was able to sit down with some of the speakers to talk about their thoughts on why marketplaces are hot right now.

Hoffman, who founded LinkedIn and was an early investor in Facebook, sees many parallels between networks and marketplaces. On the similarities in both models, he says: “There’s a question of how do you identify people? What reputational systems underlie it? What kinds of information and signaling? What kind of transactions go public? There’s some differences, too, but it’s essentially a similar brain activity.”

As for why marketplaces are getting more attention now, Hoffman believes that it’s in part due to mobile and the progression in human behavior. “Now everyone is comfortable with the notion of, ‘Oh, I could actually find someone I don’t know and transact with them, either as travelers, hosts, sellers, buyer.’ Those that can actually work mean that I have some trust in these mechanisms,” he explains further.

Rothman agrees with Hoffman, and told me that trust is a huge element of why marketplaces have evolved, as well as the biggest challenge for these marketplaces. “They’re really selling trust. And until the web adds social identity, I think creating trust at scale is really hard. As we’ve heard, marketplace is about influence, and if you can’t control the experience, if you can’t control the product, you can’t control the fulfillment. All you can control is trust and you need to have that. And then mobile is an accelerant to that. If you are a local market, or a local business, you have to have mobile. There’s just no way Uber works without mobile,” he says.

...

So how do marketplaces add trust? Hoffman advises to look at mechanisms by which you can essentially borrow some trust and add it to the product, such as using social networks or identities. He recalled a product development from his PayPal days, where an engineer developed a better way to authenticate bank accounts.

For years, in order to authenticate a bank account you had to send in a voided check, and a copy of your drivers license. PayPal realized that if they wanted to get to scale, the company would have to make it easier to create accounts. “If we can’t solve this problem, we basically don’t have an interesting business model,” he said. One of the early engineers developed a way to send two sub-dollar transactions to the account, to create a PIN of sorts for instant verification.

While friction is something most marketplaces want to remove, Rothman argues that some should consider “the concept of strategic friction” when it comes to trust and safety. He thinks it’s one of the only places where friction is not only tolerable but kind of desirable.

...

"Hoffman says that Airbnb was creating liquidity out of space. Even if the hosts didn’t own their real estate, the liquidity involved is “hugely valuable and motivating to them.” So, they’ll adopt mobile products, and go through hoops to make that happen. “There was no question that this is going to work,” he says. 

...

Now that Greylock is allocating some of its new $1 billion in funding toward the marketplace model, we’ll be looking to see where the firm will be placing its bets. Rothman thinks that in the next five years there will be more $1 billion dollar marketplaces than there were in the past 20 years, and we already have quite a few that are rising fast. Stay tuned."