Auctioning fresh fish, quickly. by Hafalir, Kesten, Sherstyuk and Tao

 Here's an auction for when leisurely price discovery is costly.

When Speed is of Essence: Perishable Goods Auctions by Isa Hafalir, , Onur Kesten, , Katerina Sherstyuk, , Cong Tao.  December 2023

Abstract: We study a remarkable auction used in several fish markets around the world, notably in Honolulu and Sydney, whereby high-quality fish are sold fast through a hybrid auction that combines the Dutch and the English formats in one auction. Speedy sales are of essence for these perishable goods. Our theoretical model incorporating “time costs” demonstrates that such Honolulu-Sydney auction is preferred by the auctioneer over the Dutch auction when there are few bidders or when bidders have high time costs. Our laboratory experiments confirm that with a small number of bidders, Honolulu-Sydney auctions are significantly faster than Dutch auctions. Bidders overbid in Dutch, benefiting the auctioneer, but bidding approaches risk-neutral predictions as time costs increase. Bidders fare better in the Honolulu-Sydney format compared to Dutch across all treatments. We further observe bidder attempts to tacitly lower prices in Honolulu-Sydney auctions, substantiating existing concerns about pricing in some fish markets.

From the introduction:

"We explore a seemingly peculiar and largely under-studied dynamic auction format employed in several perishable goods markets around the world, such as in Honolulu and Sydney fish markets. In this auction, the auctioneer sets a starting price that is neither as low as in an English auction nor as high as in a Dutch, but at a middle ground, allowing bidders to bid at the onset (either by raising their hands during a verbal Honolulu auction or by clicking a button during an automated Sydney clock auction). If at least one bidder bids, the auction proceeds as an English (ascending price) auction. If there is no initial interest, the price begins to drop, as in a Dutch (descending price) auction. However, once a bidder bids, other bidders are allowed to counter-bid, potentially reverting the auction to an English auction. Although this auction format has been documented (Feldman, 2006) and is apparently employed in a number of fish markets in France and Denmark (Guillotreau and Jim´enez-Toribio, 2006; Laks´a and Marszalec, 2020) as well as in Honolulu and Sydney,2 little is understood about the reasons for its emergence and its advantages over more traditional descending-only Dutch auction that is also commonly used for perishable goods."

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Update:

Joshua Gans points me to this related paper in Management Science

Channel Auctions

Eduardo M. Azevedo , David M. Pennock, Bo Waggoner , E. Glen Weyl 

Published Online:4 Mar 2020 https://doi.org/10.1287/mnsc.2019.3487

Abstract

Standard auction formats feature either an upper bound on the equilibrium price that descends over time (as in the Dutch auction) or a lower bound on the equilibrium price that ascends over time (as in the English auction). We show that in some settings with costly information acquisition, auctions featuring both (viz., a narrowing channel of prices) outperform the standard formats. This Channel auction preserves some of benefits of both the English (truthful revelation) and Dutch (security for necessary information acquisition) auctions. Natural applications include housing, online auction sites like eBay, recording transactions on blockchains, and spectrum rights.

This paper was accepted by Joshua Gans, business strategy.

The international market for squid (and how squid came to be calamari...)

China's fishing fleet plays a giant role in the international market for squid. The New Yorker has the story:

THE CRIMES BEHIND THE SEAFOOD YOU EAT.  China has invested heavily in an armada of far-flung fishing vessels, in part to extend its global influence. This maritime expansion has come at grave human cost.  By Ian Urbin in collaboration with the Outlaw Ocean Project.

"In the past few decades, partly in an effort to project its influence abroad, China has dramatically expanded its distant-water fishing fleet. Chinese firms now own or operate terminals in ninety-five foreign ports. China estimates that it has twenty-seven hundred distant-water fishing ships, though this figure does not include vessels in contested waters; public records and satellite imaging suggest that the fleet may be closer to sixty-five hundred ships. (The U.S. and the E.U., by contrast, have fewer than three hundred distant-water fishing vessels each.) 

...

" The country is largely unresponsive to international laws, and its fleet is the worst perpetrator of illegal fishing in the world, helping drive species to the brink of extinction. Its ships are also rife with labor trafficking, debt bondage, violence, criminal neglect, and death. “The human-rights abuses on these ships are happening on an industrial and global scale,” Steve Trent, the C.E.O. of the Environmental Justice Foundation, said.

...

"Vessels can now stay at sea for more than two years without returning to land. As a result, global seafood consumption has risen fivefold.

"Squid fishing, or jigging, in particular, has grown with American appetites. Until the early seventies, Americans consumed squid in tiny amounts, mostly at niche restaurants on the coasts. But as overfishing depleted fish stocks the federal government encouraged fishermen to shift their focus to squid, whose stocks were still robust. In 1974, a business-school student named Paul Kalikstein published a master’s thesis asserting that Americans would prefer squid if it were breaded and fried. Promoters suggested calling it “calamari,” the Italian word, which made it sound more like a gourmet dish. (“Squid” is thought to be a sailors’ variant of “squirt,” a reference to squid ink.) By the nineties, chain restaurants across the Midwest were serving squid. Today, Americans eat a hundred thousand tons a year.

...

"China has invested heavily in its fleet. The country now catches more than five billion pounds of seafood a year through distant-water fishing, the biggest portion of it squid. China’s seafood industry, which is estimated to be worth more than thirty-five billion dollars, accounts for a fifth of the international trade, and has helped create fifteen million jobs. The Chinese state owns much of the industry—including some twenty per cent of its squid ships—and oversees the rest through the Overseas Fisheries Association. Today, the nation consumes more than a third of the world’s fish."

Lobster traps, whales, and the enforcement of informal property rights

 An experiment to protect whales from becoming entangled in the long ropes that connect lobster traps on the sea floor to buoys on the surface might also change some equilibria among lobster fisherman.

The WSJ has this story:

Endangered Whales Get Lifeline From High-Tech Lobster Traps. Lobstermen are testing equipment designed to help North American right whales avoid deadly entanglements   By Eric Niiler

"Lobstermen have long used buoys to mark the location of their traps. The ropeless systems are designed to limit whales’ risk of entanglement by keeping the buoys and their ropes stowed underwater on the traps until it is time to check the traps. 

...

"Another challenge that could stand in the way of broad use of ropeless gear involves alerting other fishermen to the presence of lobster traps—whose location, in the absence of buoys, can be harder to identify. Conflict between lobstermen with fixed gear and fishermen who drag nets along the seafloor has long been a problem along the New England coast, federal officials said.

"Computer scientists at the Allen Institute for AI—a Seattle-based nonprofit research organization founded by late Microsoft co-founder Paul Allen—are developing an app to share the location of ropeless gear with other fishermen and regulators, according to Henry Milliken, supervisory research fishery biologist at NOAA’s Northeast Fisheries Science Center in Woods Hole."

********

Earlier, on a different aspect of the lobstering equilibrium:

Thursday, September 3, 2009

Policing the lobster commons

"Lobsters are caught in traps that sit on the sea floor, marked by (and recovered via) buoys that float above, connected to the trap by a rope. Lobstermen in Maine are known for policing who sets traps where by cutting the lines (or threatening to cut the lines) of lobstermen who set traps outside of their territory. From time to time there's a question about whether the state should limit certain areas to local lobstermen. Now is such a time..."

Lin Ostrom coauthored a paper on this:

Schlager, Edella, and Elinor Ostrom. "Property-rights regimes and natural resources: a conceptual analysis." Land economics (1992): 249-262.

"The enforcement of the de facto proprietor rights was borne entirely by the lobstermen of each village. The sanction that  they used against anyone who violated communal rules was gear destruction. ...The easiest means of destroying traps is to cut the rope by which the traps are attached to buoys."

Fishery regulation involves onboard observers at sea--a very dangerous job

 Next time you eat a salt water fish, spare a thought for how fisheries are regulated to keep them viable as a common pool resource.  There are catch limits, whose enforcement requires deep sea fishing boats to have onboard inspectors, called observers.  Apparently that's a dangerous job.

The Guardian has the story:

Death at sea: the fisheries inspectors who never came home.  by Bernadette Carreon 

"Being an observer, which involves monitoring fishing practices and catches to make sure boats follow the rules, is a dangerous job that can put observers in conflict with the crews on the vessels on which they are working, often hundreds, or even thousands, of kilometres from the nearest port.

"According to the Association of Professional Observers, there have been over a dozen cases of observers dying on the job since 2009 alone, including three involving Kiribati nationals."

***********

The Association of Professional Observers maintains a site that includes a page on Observer Deaths and Disappearances, as well as one on Harassment of observers, for example in ways that may compromise their data. 

Design of fisheries--EURO Excellence in Practice Award to Bichler, Ferrell, Fux, and Goeree

Congratulations to the winners, and to the fishermen and the fish for this recent award for market design.

EURO Excellence in Practice Award 2018

The winners of the 2018 EURO Excellence in Practice Award are:

Martin Bichler, Technical University of Munich

Douglas Ferrell, Department of Primary Industries, Fisheries Analysis

Vladimir Fux, TUM

Jacob Goeree, Business School, University of New South Wales

A combinatorial exchange for fishery access rights

We present the design and implementation of a combinatorial exchange for trading catch shares in New South Wales (NSW). The market provided a market-based response to a substantial policy problem in fisheries worldwide: the reallocation of catch shares among fishers in a cap-and-trade system designed to prevent overfishing.
The design needed to address several key challenges to overcome a long struggle about the right way to reallocate shares.
Participants wanted to be able to submit all-or-nothing package bids. Also, prices were required to be anonymous and linear such that sellers of two identical packages would get the same payment. These features were crucial for the adoption of the market design but difficult to accommodate in a market design. The requirements led to a computationally challenging allocation and pricing problem that addressed the key concerns of the stakeholders.
The market was organized in summer 2017 by the government and successfully put the shares into the hands of those who needed them most. The design nicely illustrates how computational optimization can provide new policy tools, able to solve complex policy problems that were considered intractable only a few years ago.

The EEPA 2018 jury consisted of Ulrich Dorndorf (chair), Erik Demeulemeester, John Poppelaars, Adam Ouorou, and Karl Dörner.

The award was presented at the closing session of the EURO 2018 Conference in Valencia (Spain).

*********

Here's an earlier post on fisheries:

Monday, February 16, 2009

Sustainable fisheries

High bids for tuna at Tsukiji fish market celebrate the new year

Bluefin tuna sells for record $1.76 million at Tokyo auction, 3 times previous record

"A bluefin tuna sold for a record $1.76 million at a Tokyo auction Saturday, nearly three times the previous high set last year
...
"In the year’s first auction at Tokyo’s sprawling Tsukiji fish market, the 222-kilogram (489-pound) tuna caught off northeastern Japan sold for 155.4 million yen
...
The winning bidder, Kiyoshi Kimura, president of Kiyomura Co., which operates the Sushi-Zanmai restaurant chain, said “the price was a bit high,” but that he wanted to “encourage Japan,” according to Kyodo News agency. He was planning to serve the fish to customers later Saturday.

"Kimura also set the old record of 56.4 million yen at last year’s New Year’s auction, which tends to attract high bids as a celebratory way to kick off the new year — or get some publicity.

Fishery management in ancient Hawaii

Ancient Civilizations Reveal Ways to Manage Fisheries for Sustainability

"The authors of the study, titled "Multicentury trends and the sustainability of coral reef fisheries in Hawai‘i and Florida", point to the U.S. National Ocean Policy as an example of emerging attempts to manage ocean ecosystems more holistically, and local fisheries co-management as a modern way of including community members in designing effective fishing regulations. However, the authors caution that effective enforcement needs to go hand in hand with the development of local governance. “The ancient Hawaiians punished transgressors with corporal punishment,” observed Kittinger. “Clearly, we don’t recommend this, but it’s easy to see there’s room to tighten up today’s enforcement efforts.”

HT: Ben Greiner

More beans, less cod in Boston next year?

"For the second straight year, the federal government is expected to lower catch limits on certain New England groundfish that swim close to the sea bottom, including cod.

"In the current 2012 season, the fishing industry's total allowable catch for Gulf of Maine cod was reduced by 22% to 6,700 metric tons. The 2013 season, which starts next May, is expected to be worse, and for more types of groundfish.

"A preliminary report from the New England Fishery Management Council suggests the next season's catch limits could include a 70% or more reduction from 2012 levels in the number of cod allowed to be caught in the Gulf of Maine and Georges Bank, a stretch of Atlantic Ocean sea floor between Cape Cod and Nova Scotia. The council is the regional policy-making arm of the National Oceanic and Atmospheric Administration's National Marine Fisheries Service.

"Fishery officials say the once abundant groundfish in the region were diminished by years of overfishing, and that even with catch quotas, stocks have not yet replenished as scientists expected. Federal and regional fishery scientists and policy makers determine quotas by measuring stocks of fish. Data comes from surveys by fishing trawlers as well as records submitted by fishermen and dealers about what they are catching and buying.
...
"Meanwhile, the Atlantic lobster industry is facing its own challenges—caused by too many lobsters. The glut has driven down prices to the lowest in decades. Maine lobstermen often send their catch to Canada to be processed, but lobstermen there are protesting and demanding the plants not accept Maine's catch. The Canadians fear Maine's low prices will drive down their own."

Fishing as an endangered but protected transaction

Here in New England, the plight of the fishing industry, and particularly of independent fishermen who operate small "day boats" from local harbors, is in the news. Three issues compete for attention: how to sustainably manage vulnerable fish populations, while keeping fishing profitable, particularly for the small independent fishermen who are seen as needing protection from larger, corporate fishing fleets.  Small fishermen are to New England what small family farms are in other areas of the country.

Here's a story from the Globe.

Change in fishing rules altering storied industry: Regulators to look at ways to protect fleet
"PLYMOUTH — Scores of fishermen have stopped going to sea in the past year as controversial new rules take hold that could fundamentally alter the storied fishing economy, culture, and communities of New England.

"The region’s scenic harbors already shelter hundreds fewer fishing boats than a decade ago, but some worry that smaller boats may vanish altogether: There are some signs the new rules, which assign groups of fishermen a quota on their catch of cod and other bottom-hugging fish, could accelerate a trend of consolidating those boats into far fewer, more efficient vessels. Some small-boat fishermen are selling or leasing their allotment to others under the new rules because they cannot turn a profit.

"“This may not be the end of fishing, but it is the end of fishing as we know it,’’ said Steve Welch, as he tinkered on one of his two boats, the Holly & Abby, in Plymouth. Nearby, his dog Hudson ate mussels that seagulls dropped on an icy dock.

Welch leased the fishing privileges on both his boats and laid off three workers this year. “We are talking jobs, tradition, culture,’’ he said. “All that will be left are large boats owned by corporations with deep pockets.’’ 

...
"However, it is inevitable, Grant said, that some fishermen will be pushed out of business for good because there are still not enough fish for all the fishermen. And that is a hard thing to take.

“Fishing is not what [these fishermen] do; it is who they are,’’ Grant said. “It helps define the community. You can’t say that about selling tires. They are a cultural icon.’’
...
"Still, there are some bright spots with the new rules. Some $5 million in federal funds has been allotted to New England states to buy fishing permits and lease them back, often at a reduced price, to vulnerable fishermen. Some fishermen say the new rules are successful, allowing them to keep catching bottom-dwelling fish while others are diversifying to go after more abundant species.

But some fishermen, like Welch, wonder whether there will be small fishermen left when the fish finally come back.

“I’ve been fishing for 33 years,’’ Welch said, proudly pointing out how he overhauled the electrical and hydraulic system on the Holly & Abby. “I’m a small, independent business owner. That should have value.’’"

HT: Tim Gray

Ingredient lists, and farmed fish

Consumer protection laws work in strange ways, but one thing they do fairly well is to require that ingredients be listed on processed food. On a recent morning, drinking coffee imported from a warm place and eating smoked salmon from a cold place, I looked at the ingredient list on the front of the package of salmon, which read: "Atlantic Salmon, Salt, Hardwood Smoke." On the back of the package, this:

"Synthesized carotenoids are added to the feed of this farmed salmonoid to achieve the color that wild salmonoids develop from eating carotenoids found in their natural diet."

Some years ago, when I hosted a conference on sustainable fisheries , the fishermen present insisted that the conference dinner should be at a restaurant that served only wild fish...

Random allocation, preferences, and welfare: a fish story

Flying from Madrid to Boston on an Airbus with two aisles not long ago, two stewardesses proceeded in parallel down the aisles offering food. I asked for the fish, but the stewardess in my aisle was already out of fish. Speaking to her colleague in the other aisle, she ascertained that her colleague still had some fish. Rather than pass the fish across the (empty) seat between them, “my” stewardess told me that, if her colleague still had fish when she completed her aisle, then I could have it. (I chose the vegetable dish…)

We see similar issues when changes are discussed in how to allocate deceased-donor organs for transplants, or some other policy where there has been a previous decision on an order of allocation to randomly arriving agents. To have passed the fish across to me would have disadvantaged some passenger who, but for the demand for fish on my side of the plane, would have been able to eat fish…

Of course, assuming that on which side of the plane passengers are seated is random, the policy of allowing fish to be passed from side to side and not just from front to back would have the same ex-ante welfare properties. But, once the passengers are seated, any change in policy would likely help some passenger only by hurting another.

This kind of discussion comes up from time to time in the allocation of school places, as well as transplant organs.

Policing the lobster commons

Lobsters are caught in traps that sit on the sea floor, marked by (and recovered via) buoys that float above, connected to the trap by a rope. Lobstermen in Maine are known for policing who sets traps where by cutting the lines (or threatening to cut the lines) of lobstermen who set traps outside of their territory. From time to time there's a question about whether the state should limit certain areas to local lobstermen. Now is such a time:

In Maine, Tensions Over Ailing Lobster Industry
"Officially, anyone with a Maine lobster license can set traps almost anywhere in state waters. Most lobstermen are allowed 800 traps each, making for a crowded ocean floor.
But unofficially, each harbor has its own boundaries, determined by local lobstermen over the decades. Newcomers often find their buoys snatched or their trap lines cut. The lobstermen who live on Maine’s rugged islands are especially territorial and known for practicing frontier justice; in one notorious case in 2000, two lobstermen fought over turf with a pitchfork and a fish gaff."
...
"The idea of a resident-only lobstering zone is not without precedent. The state approved a two-mile “conservation zone” around Monhegan Island in 1998, restricting access to local lobstermen, who had complained about interlopers from the mainland. "
...
"George Lapointe, the state’s commissioner of marine resources, said he had not yet decided whether to endorse a resident-only zone for Matinicus and had to consider the constitutional rights of all of the state’s roughly 5,800 licensed lobstermen.
“I’ve had three other islands say they’re interested in getting their own zone if we create one for Matinicus,” Mr. Lapointe said. “One of the concerns is the balkanization of lobster territories along the coast.”
He said that enforcing the zone around Monhegan had proved expensive for the state, and that while the shooting on Matinicus had put the island’s problems under a magnifying glass, lobstermen up and down Maine’s coast were hurting."

What if they ran an auction and nobody came?

David Fahrenthold writes in the Washington Post about Maryland's unsuccessful attempt to buy back some crab fishing licenses via an auction:
To Some Chesapeake Crabbers, a $50 Document Is Priceless
"Despite Industry's Woes, Many Watermen Refuse to Sell Symbol of Old Way of Life"

Apparently the licenses have value even to those who don't currently use them to catch crabs. The right to take crabs is what makes you a waterman...

Licensing of Lawyers and Doctors and some more surprising professions

Can it be that Texas has only 22 licensed matchmakers?
(But 73 licensed ringside physicians?)
You can search Texas licenses by type here , in a drop down menu that starts with airconditioning contractors and ends with water well drillers, with matchmakers and many others in between.

Licensing plays a big role in the regulation of some markets, and not just the markets you would suspect, like those for doctors and lawyers. Some of the questions that come up in the licensing biz can be gleaned from the url's of the decisions they generate, like this one: http://www.license.state.tx.us/cosmet/cosmet.htm#eyelashes .
(That's from the Statement from TDLR about applying false eyelashes, eyelash tabbing and eyelash extensions and whether a person must hold a cosmetology license in order to perform these procedures.)

And, since you asked, here's the Texas ruling on fish pedicures.

Across state lines, there's some uniformity in how doctors and lawyers are treated, although not so much that moving from state to state is always easy. And there are some notable differences between doctors and lawyers.

Q. In how many states can a new medical school graduate be licensed to practice medicine right after passing the necessary exams (i.e. before doing at least one year of supervised clinical experience as a resident)?

A. Zero (although no information is available at this time on the Solomon Islands and the Northern Marianas, see State-specific Requirements for Initial Medical Licensure compiled by the Federation of State Medical Boards.

Q. In how many states can a new law school graduate be licensed to practice law after passing the necessary exams?

A. In all of them, unless I'm badly misreading the Comprehensive Guide toBar Admission Requirements 2009, published by the National Conference of Bar Examiners.

Q. What do Mississipi, Missouri, Texas and the Northern Marianas Islands have in common?
A. Those are the American jurisdictions in which a felony conviction is an automatic bar to admission to the legal bar, according to "CHART II: Character and Fitness Determinations" in the link above. (That doesn't mean felons get a free pass in other jurisdictions, just that their disqualification isn't categorical and automatic. E.g. in Florida, a felony conviction is "Not an automatic bar, but restoration of civil rights is required.")

Paul Romer on market design

Paul Romer, at Charter Cities, thinks of market design as part of the economics of ideas, in his post on Fish Proverb v2.0 (Bringing in Rules):

"Most of the work on the economics of ideas has focused exclusively on a subset of ideas, technologies. Economists have been slower to acknowledge the complementary set of ideas, rules. "

Is fish-tossing repugnant?

Fishmongers in Seattle throw dead fish around the market, and it has apparently become not just a way of handling fish for sale, but a form of entertainment.

"Jeremy Ridgway, one of the managers at the market, said that he has done fish shows for the ministry of manpower in Singapore, for schoolchildren in Oklahoma and at countless other venues."

One of those other venues was a meeting in Seattle of the American Veterinary Medical Association, which decided to go ahead with "a plan to host a team-building program offered by the famous fish-throwers of Seattle's Pike Place Fish Market."

The organization People for the Ethical Treatment of Animals (PETA) finds this repugnant, and thinks such events should not be conducted.

Judge for yourself: Seattle's Pike Place fishmongers under fire .

Fly fishing

I spent last weekend in Jackson Hole Wyoming at a transplant conference. My friend Owen Phillips, the U. of Wyoming experimental economist who I first met when he visited Harvard in 2005, invited me to go fly fishing with him the next day. He hired a well recommended fishing guide, Mickey Brockman.

Fishing guides are licensed by the state, and work as subcontractors for businesses that hold outfitters' licenses (in Mickey's case, Westbank Anglers). So the arrangement is a bit like taxi drivers in cities where legal cabs require taxi medallions, except that fishing guides use their own equipment. Mickey's equipment includes a dory, which he rows facing forward, and a variety of fishing gear, including the barbless hooks that allow you to release the fish quickly after catching it. (He also packed lunch, which we ate looking up at the Grand Tetons, which sounds even better in French.)

Owen and I presented Mickey with a complicated task, since Owen is an expert angler with a lifetime of experience, and I was holding a fly reel for the first time. So, Mickey had to teach me the mechanics of casting, while keeping up a running list of likely targets for Owen to aim at.

It was an experience, and if you're in Jackson Hole and can't get Owen to take you, I certainly recommend Mickey.

(Thanks, Owen.)

To make the story long, we finished the day eating elk at Stiegler's (also recommended), which got us thinking about the market for elk: it turns out they are farm raised.

From Jackson Hole I flew to Stony Brook, Long Island, for a game theory conference. That tells you something about medicine and economics...

Opposite of repugnance: Protected transactions

I've been thinking lately about transactions that are the opposite of repugnant, i.e. transactions that, as a society, we often seek to promote, for reasons other than efficiency or pure political expediency.

In yesterday's post I mentioned monogamous marriage between a man and a woman, which in many countries and U.S. states is promoted over other forms of marriage (such as polygamy or same sex marriage).

Home ownership in the US is an obvious one, in this post-housing-bubble financial crisis, in which there have been Federal bailouts of the various Government Sponsored Entities like Fanny Mae and Freddy Mac, set up to promote home ownership.

Food production by small farmers, not only in the US, but also in Europe and Japan: we protect this by subsidies, price supports, government supported crop insurance programs, etc.

Fishing by small fishing boats: if we were only interested in protecting fish to keep fisheries sustainable, we might regulate fisheries by imposing seasonal limits on how much could be caught. But in many cases we also set daily limits (e.g. some fishermen on Cape Cod are limited to catch no more than 400lbs of scallops a day). This makes large, factory fishing uneconomical, and protects small local fishermen.

The right to purchase guns probably falls into this category in the U.S.

Of course, as with repugnant transactions, protected transactions may involve a lot of complications, like providing public goods and protecting rights. But it may be that to better understand which kinds of transactions may come to be regarded as repugnant, it will help to understand which kinds of transactions are sometimes protected.

Update: looking at the comments, commuting alone in a car seems worth including on the list of protected transactions in the U.S. (And thank you to Dubner at Freakonomics for his generous plug of this blog...)

Sustainable fisheries

Nowhere is the "tragedy of the commons" clearer than in ocean fisheries, which are difficult to regulate and maintain in a sustainable way. A recent article, Fish Shares and Sharing Fish describes the problem well. (From a market design perspective, one difficulty is that fishermen have large strategy sets, so changing the rules of the game often changes behavior in unanticipated ways.)

In national waters, regulations involve law enforcement, and the Washington Post has an illuminating story about a criminal investigation involving the sale of illegally large rockfish (striped bass), which the law requires must be thrown back so that the breeding pool should not be selected to consist of only small fish. Swimming in Intrigue in Backwoods of Md.: Four-Year Undercover Probe Led to Charges of Rockfish Trafficking.
Some quick quotes from that story:
"Cheating is an old vice around the Chesapeake, with watermen sneaking in extra bushels of oysters or undersized perch. "
"The fish -- a key predator and a beloved sport fish, also known as striped bass -- has rebounded from desperate lows in the 1980s, in part because of restrictions on fishing."
"Many of the fish were tagged as having been caught with hooks and lines, but the agents suspected they had actually been caught in a large net and should have been subject to different restrictions.
To prove it, they turned to a fish coroner. "

In October 2007 I hosted a conference at Harvard organized by Ecotrust on Market Design for Limited Access Programs in U.S. Fisheries. One consequence of that is that, together with some students and colleagues, I occasionally get to talk to Paul Parker of the Cape Cod Fisheries Trust, about contemporary market design problems in the Cape Cod scallop and ground fish fisheries. His concern is with how regulations on fishing may impact the composition of the fishing fleet; and how the makeup of the fleet (specifically the relationship between big factory ships and the small day boats that are the constituency of the Cape Cod Commercial Hook Fishermen's Association) will in turn impact the fish.

School choice at sea

"Peer effects" are a potentially big issue in schools, although hard to model. How children affect each others' education can be hard to understand and measure. (What kinds of children do you want your children to go to school with, and what difference does it make?)

For bluefish, in contrast, there is a clear case for assortative matching: "Bluefish are cannibalistic. For this reason, bluefish tend to swim in schools of similarly-sized specimens."

(a market designer joke:)