My Morse Lecture at INFORMS 2022, tomorrow

 Tomorrow, Wednesday October19, from 8-9am Eastern time, I'll be giving the Morse Lecture at the INFORMS 2022 annual meeting in Indianapolis

Market Design: The Dialog Between Simple Abstract Models and Practical Implementation

I’ll review some of the elegantly simple models that underlie the initial designs for matching processes like the medical residency Match, school choice and kidney exchange, and the modifications, complications and  computations that were needed to get new designs adopted, implemented and maintained over the years.

You can read about the occasion of this lecture, my Philip McCord Morse Lectureship Award here.

Jacques Drèze (1929-2022)

Jacques Drèze, the eminent Belgian economist who was the founding director of the Center for Operations Research and Econometrics (CORE) at UCLouvain has died.

Aside from his considerable professional contributions as a researcher, he was an institution builder.  CORE was a center of game theory when game theory was young, and played an important role in its development.

Here is the memorial page at CORE.

Here is the Econometric Society memorium: IN MEMORIAM: Jacques Drèze

"CORE and its prestigious visitors’ program, thanks initially to the support from the Ford foundation, was his initiative as well as the European Doctoral Program in Quantitative Economics(EDP)."

 

David Schmeidler (1939-2022)

My old friend David Schmeidler has just passed away. 

We met very shortly after I got my Ph.D.in 1974 and moved to the University of Illinois, where he was a frequent visitor. He was already well known for his work on the nucleolus (a kind of cardinal centroid for games in characteristic function form with sidepayments, which is contained in the (ordinal) bargaining set). 

He was the very model of a modern major game theorist.  At the time we met, I remember being impressed by his breadth of interests, in connection e.g. with his paper with Elisha Pazner on fairness. I asked him how he viewed his work on fairness as connecting with his work on game theory, and as I recall he said something (briefly) to the effect that game theorists should be interested in all aspects of transactions.  I was impressed. (Decades later at dinner in our house in Boston, I told him that, and he replied "Later I decided that was all bullshit."  But I remained, and remain impressed.)

Here's a picture I took of him in 2014, speaking at a conference in Brazil organized by Marilda Sotomayor. 

David Schmeidler in Sao Paulo in 2014

He is probably best known today for his work on various models of non-expected utility theory. Here is David on Google Scholar.

 Here's a tribute to him published two years ago by Peter Wakker, who met him as a grad student in 1984, and recalls him as a man of few words, and big insights.

A Personal Tribute to David Schmeidler’s Influence by Peter P. Wakker Dans Revue économique 2020/2 (Vol. 71), pages 387 à 390

Some of his most important work is with Itzhak Gilboa, who speaks about their work here (video and transcript): Non-Bayesian Decision Theory

Itai Ashlagi recommends these of his papers:

Equilibrium points of nonatomic games,

The nucleolus of a characteristic function game

 Maxmin Expected Utility with a Non-Unique Prior,

Subjective probability and expected utility without additivity.  

*****

Update: Ali Kahn and Mark Machina write perceptive short memories here: https://saet.uiowa.edu/wp-content/uploads/sites/18/2022/03/Schmeidler-Consolidated-Copy.pdf 

SMBC on economists and money (and game theory)

 Here's Saturday Morning Breakfast Cereal on economists: https://www.smbc-comics.com/comic/econs

And it's a two-fer, economists are hot over at SMBC: https://www.smbc-comics.com/comic/holes

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One Hundred Years of Game Theory: Nobel Symposium in Stockholm

 I'm in Stockholm for a celebration of the 100th anniversary of Emile Borel's 1921 paper on Game Theory.

It's a three day conference, Friday through Sunday, but I gather that only Sunday will be publicly available on Zoom.

Here's the schedule for all three days:

NOBEL SYMPOSIUM “ONE HUNDRED YEARS OF GAME THEORY”, DECEMBER 17-19, 2021

My talk is on "Game theory and economic engineering: Dealing with big strategy sets, including invention of new strategies"

And here's the announcement and Zoom link for Sunday, Dec 19 (the day Borel's paper was presented in 1921)

One Hundred Years of Game Theory: Future Applications and Challenges

"On December 19, 1921, the mathematician Emile Borel published a paper which laid the foundation of game theory. He offered a new framework for analysis in economics, political science, and other social and behavioral sciences. The centennial of this publication is a good occasion to ask where we may look today for the next breakthroughs that will be important for future economics and other social sciences, and for biology and computer science. What are the most promising directions for application? What are the most important challenges?

Start time: 2021-12-19 at 14:30

End time: 2021-12-19 at 16:30

Location: via Zoom. Link will be sent to the email address provide in the registration form."

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I hear that some of the scheduled speakers who expected to come in person on Sunday will, at the last minute, not be able to do so, due to various outbreaks of Covid, particularly at Cornell.  Fortunately we've become good at using Zoom...

John Morgan (1967-2021)

 Here's his obituary from Berkeley Haas, that I learned of only recently:

‘A giant of a person’: Economist John Morgan dies at 53 OCTOBER 29, 2021| BY LAURA COUNTS

"Professor John Morgan, an economist who found elegant new ways to analyze the world through the lens of game theory, and whose popular classes and sage mentorship made a deep impression on his students, passed away Oct. 6 at age 53. He died peacefully at his Walnut Creek home.

"During his nearly two decades at Berkeley Haas, Morgan left his mark through his prolific and wide-ranging research, his unconventional teaching that drew on strategy games he invented, and his generous leadership. He had been struggling with a painful autoimmune disease that put him on medical leave, but he continued with his research and had planned to resume teaching in the spring."

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

A paper of his that springs to mind is this one:

... plus shipping and handling: Revenue (non) equivalence in field experiments on ebay, by Tanjim Hossain and John Morgan, 2006, The B.E. Journal of Economic Analysis & Policy, https://doi.org/10.2202/1538-0637.1429

Abstract: Many firms divide the price a consumer pays for a good into two pieces---the price for the item itself and the price for shipping and handling. With fully rational customers, the exact division between the two prices is irrelevant---only the total price matters. We test this hypothesis by selling matched pairs of CDs and Xbox games in a series of field experiments on eBay. In theory, the ending auction price should vary inversely with the shipping charge to leave the total price paid constant. Contrary to the theory, we find that charging a high shipping cost and starting the auction at a low opening price leads to higher numbers of bidders and higher revenues when the shipping charge is not excessive. We show that these results can be accounted for by boundedly rational bidding behavior such as loss-aversion with separate mental accounts for different attributes of the price or disregard for shipping costs.

Here's his Google Scholar page: John Morgan

Approximating large games

One of the big lessons of market design is that market participants may have big strategy sets.  This means that analyzing naturally occurring strategic settings may exceed our ability to model and analyze them as fully specified games.

Here's a paper that explores an interesting, somewhat related idea:

Christian Kroer, Alexander Peysakhovich, Eric Sodomka, Nicolas E. Stier-Moses (2021) Computing Large Market Equilibria Using Abstractions. Operations Research, Articles in Advance 01 Oct 2021, https://doi.org/10.1287/opre.2021.2163

"Abstract. Computing market equilibria is an important practical problem for market design, for example, in fair division of items. However, computing equilibria requires large amounts of information (typically the valuation of every buyer for every item) and computing power. We consider ameliorating these issues by applying a method used for solving complex games: constructing a coarsened abstraction of a given market, solving for the equilibrium in the abstraction, and lifting the prices and allocations back to the original market. We show how to bound important quantities such as regret, envy, Nash social welfare, Pareto optimality, and maximin share/proportionality when the abstracted prices and allocations are used in place of the real equilibrium. We then study two abstraction methods of interest for practitioners: (1) filling in unknown valuations using techniques from matrix completion and (2) reducing the problem size by aggregating groups of buyers/items into smaller numbers of representative buyers/items and solving for equilibrium in this coarsened market. We find that in real data allocations/prices that are relatively close to equilibria can be computed from even very coarse abstractions."

Marilda Sotomayor: a career in matching

 Pesquisa FAPESP has a good interview with Marilda Sotomayor, about her career in game theory, and matching theory in particular, and how she came to work with David Gale.  Google translate does a good job (except that it gives her the pronouns he and his...)

Marilda Sotomayor: Uma pensadora dos jogos, by Yuri Vasconcelos, Pesquisa FAPESP, Edition 309, nov. 2021

[GT: Marilda Sotomayor: A game thinker]

[With] Researcher and mathematician Alvin Roth, with whom he wrote a book in 1990

Stanford SITE seminar: Dynamic Games, Contracts, and Markets, Aug 18-20

 

SITE 2021 PROGRAM

Session 7: Dynamic Games, Contracts, and Markets

Date

Wednesday, August 18, 2021, 9am - Friday, August 20, 2021, 5pm

Location

Zoom

ORGANIZED BY

• Simon Board, University of California, Los Angeles
• Gonzalo Cisternas, Massachusetts Institute of Technology
• Mira Frick, Yale University
• George Georgiadis, Northwestern University
• Andrzej Skrzypacz, Stanford GSB
• Takuo Sugaya, Stanford GSB

The idea of this session is to bring together microeconomic theorists working on dynamic games and contracts with more applied theorists working in macro, finance, organizational economics, and other fields. First, this is a venue to discuss the latest questions and techniques facing researchers working in dynamic games and contracts. Second, we wish to foster interdisciplinary discussion between scholars working on parallel topics in different disciplines, in particular, helping raise awareness among theorists of the open questions in other fields.

This is a continuation of successful SITE annual sessions 2013-2020. In previous years, we attracted people from economics, finance, operations research, political economy, and other related fields, ranging from Ph.D. students to senior professors. We hope to have a similar number of attendees this year as in the past. Specific topics likely to be covered include repeated and stochastic games, dynamic optimal contracts, dynamic market pricing, reputation, search, and learning and experimentation.

In This Session

Wednesday, August 18, 2021

AUG 18

9:00 AM - 9:45 AM

Wealth Dynamics in Communities

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Presented by: Daniel Barron (Northwestern University)

Co-author(s): Yingni Guo (Northwestern University) and Bryony Reich (Northwestern University)

This paper develops a model to explore how favor exchange in communities influences wealth dynamics. We identify a key obstacle to wealth accumulation: wealth crowds out favor exchange. Therefore, low-wealth households are forced to choose between growing their wealth and accessing favor exchange within their communities. The outcome is that some communities are left behind, with wealth disparities that persist and sometimes even grow worse. Using numerical simulations, we show that place-based policies encourage both favor exchange and wealth accumulation and so have the potential to especially benet such communities.

AUG 18

9:45 AM - 10:00 AM

Break

AUG 18

10:00 AM - 10:45 AM

Optimal Dynamic Allocation: Simplicity through Information Design

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Presented by: Faidra Monachou (Stanford University)

Co-author(s): Itai Ashlagi (Stanford University) and Afshin Nikzad (University of Southern California)

We study dynamic nonmonetary markets where objects are allocated to unit-demand agents with private types. An agent’s value for an object is supermodular in her type and the quality of the object, and her payoff is quasilinear in her waiting cost. We analyze direct-revelation mechanisms that elicit agents’ types and assign them to objects over time. We identify the welfare-maximizing mechanism and show that it can be implemented by a first-come first-served wait-list with deferrals when the
marketmaker can design the information disclosed to agents about the objects. The optimal disclosure policy pools adjacent object types.

AUG 18

10:45 AM - 11:00 AM

Break

AUG 18

11:00 AM - 11:45 AM

Probabilistic Assortative Matching under Nash Bargaining

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Presented by: Nicolas Bonneton (University of Mannheim)

Co-author(s): Christopher Sandmann (London School of Economics)

This paper re-visits the canonical random search and matching model with Nash bargaining. By introducing pair-specific production shocks, our framework generates meeting-contingent match outcomes that are random. We provide a robust characterization of probabilistic matching patterns for any non-stationary environment, generalizing results by Shimer and Smith (2000). We nd that, although their prediction of single-peaked preferences over meetings is robust, search frictions upset positive assortative matching across well-assorted pairs. As a second contribution, we show that the non-stationary random search matching model is a mean eld game, and admits a representation as a system of forward-backward stochastic differential equations. This representation affords a novel existence and uniqueness result, casting doubt on the robustness of multiple self-fulfilling equilibrium paths frequently reported in the literature.

Thursday, August 19, 2021

AUG 19

9:00 AM - 9:45 AM

Price Experimentation in Confidential Negotiations

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Presented by: Jangwoo Lee (McCombs School of Business, University of Texas at Austin)

I develop a model in which a long-lived seller concurrently negotiates with multiple long-lived buyers over two periods. Within this framework, I consider two protocols: a public negotiation process and a confidential negotiation process. In the confidential negotiation process, buyers competitively engage in “price experimentation”: they sacrifice initial profits so that they can enjoy informational advantages over competitors later. Due to this channel, the seller benefits from (1) maintaining confidentiality over past offers and (2) reducing the number of buyers in the confidential negotiation process, even without any entry cost.

AUG 19

9:45 AM - 10:00 AM

Break

AUG 19

10:00 AM - 11:45 AM

Large-Sample Rankings of Information Structures in Games

Presented by: Mira Frick (Yale University)

Co-author(s): Ryota Iijima (Yale University) and Yuhta Ishii (Pennsylvania State University)

 

 

AUG 19

10:45 AM - 11:00 AM

Break

AUG 19

11:00 AM - 11:45 AM

The Cost of Optimally Acquired Information

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Presented by: Alexander W. Bloedel (Stanford University)

Co-author(s): Weijie Zhong, (Stanford Graduate School of Business)

This paper develops a theory for the expected cost of optimally acquired information when information can be acquired sequentially and there is no explicit cost of delay. We study the “reduced-form” Indirect Cost functions for information generated by sequential minimization of a “primitive” Direct Cost function. The class of Indirect Costs is characterized by a recursive condition called Sequential Learning-Proofness. This condition is inconsistent with Prior Invariance: Indirect Costs must depend on the decision-maker’s prior beliefs. 

We show that Sequential Learning-Proofness provides partial optimality foundations for the Uniformly Posterior Separable (UPS) cost functions used in the rational inattention literature: a cost function is UPS if and only if it is an Indirect Cost that (i) satisfies a mild regularity condition or, equivalently, (ii) is generated (only) by Direct Costs for which the op timal sequential strategy involves observing only Gaussian diffusion signals. We characterize the unique UPS cost function that is generated by a Prior-Invariant Direct Cost; it exists only when there are exactly two states. 

We also propose two specific UPS cost functions based on additional optimality principles. We introduce and characterize Total Information as the unique Indirect Cost that is Process Invariant when information can be decomposed both sequentially and “simultaneously”: it is uniquely invariant to the “merging” and “splitting” of experiments. Under regularity conditions, Mutual Information is the unique Indirect Cost that is Compression-Invariant when as pects of the state space can be “freely ignored”: it is uniquely invariant to the “merging” and “splitting” of states. We argue that Total Information and Mutual Information represent the normatively ideal costs of, respectively, “producing” and “processing” information. 

 

Friday, August 20, 2021

AUG 20

9:00 AM - 9:45 AM

Optimal Feedback in Contests

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Presented by: George Georgiadis (Northwestern University)

Co-author(s): Jeffrey Ely (Northwestern University), Sina Khorasani (UC San Diego), and Luis Rayo (Northwestern University)

We derive optimal contests for environments where output takes the form of breakthroughs and the principal has an informational advantage over the contestants. Whether or not the principal is able to provide real-time feedback to contestants, the optimal prize allocation is egalitarian: all agents who have succeeded in a pre-specified time interval share the prize equally. When providing feedback is feasible, the optimal contest takes a stark cyclical form: contestants are fully apprised of their own success, and at the end of each fixed-length cycle, they are informed about peer success as well.

AUG 20

9:45 AM - 10:00 AM

Break

AUG 20

10:00 AM - 10:45 AM

Dynamic Amnesty Programs

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Presented by: Sam Kapon (New York University)

A regulator faces a stream of agents each engaged in crime with stochastic returns. The regulator designs an amnesty program, committing to a time path of penalty reductions for criminals who self-report before they are detected. In an optimal time path, the intertemporal variation in the returns from crime can generate intertemporal variation in the generosity of amnesty. I construct an optimal time path and show that it exhibits amnesty cycles. Amnesty becomes increasingly generous over time until it hits a bound, at which point the cycle resets. Agents engaged in high return crime self-report at the end of each cycle, while agents engaged in low return crime self-report always.

AUG 20

10:45 AM - 11:00 AM

Break

AUG 20

11:00 AM - 11:45 AM

Screening for Breakthroughs

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Presented by: Ludvig Sinander (Northwestern University)

Co-author(s): Gregorio Curello (University of Bonn)

We identify a new and pervasive dynamic agency problem: that of incentivising the prompt disclosure of productive information. To study it, we introduce a model in which a technological breakthrough occurs at an uncertain time and is privately observed by an agent, and a principal must incentivise disclosure via her control of the agent’s utility. We uncover a striking deadline structure of optimal mechanisms: they have a simple deadline form in an important special case, and a graduated deadline structure in general. We apply our results to the design of unemployment insurance schemes.

 

Hugo Sonnenschein (1940-2021)

 A chain of emails originating from U. Chicago brings the news that Hugo Sonnenschein has died.

Along with his many accomplishments as an economic theorist and then as a university administrator, he was a mentor to many, both formally and informally.  

Among the famous economists whose dissertations he supervised (taken from Wikipedia) are  John Roberts, Salvador Barbera, Dilip Abreu, Faruk Gul, Matt Jackson, Vijay Krishna, and Phil Reny.

Here's the list of Hugo's students from the Mathematics Genealogy Project: Abreu, Dilip; Barbera, Salvador; Cho, In-Koo; Dudey, Marc; Fang, Ryan; Fiaccadori, Marco; Gul, Faruk; Krishna, Vijay; Mailath, George; Mardones, Felipe; McLennan, Andrew; Nava, Francesco; Novshek, William; Pearce, David; Reny, Philip; Resende, Jose; Roberts, Donald; Santamaria, Martin; Simon, Leo; Sontheimer, Kevin; Spiegel, Matthew; Vincent, Daniel

The U. Chicago obit is at the link above. Here's Hugo's Wikipedia page that also focuses on his presidency at the University of Chicago. 

Here's Hugo's page at the History of Economic Thought project, which focuses on his contributions to general equilibrium theory and social choice.

Here's his cv.

Before becoming president of U. Chicago, Hugo was Princeton's provost. Some of the changes he instituted at Chicago were controversial among those who feared that they would make Chicago more like Princeton. Here's the Chicago Sun Times on that:

Hugh Sonnenschein, controversial former University of Chicago president, dead at 80.  He drew criticism from students and scholars including Saul Bellow for a university push to expand enrollment and cut the number of required courses to let students take more electives.

 

I first encountered Hugo in his capacity as Editor of Econometrica from 1977-1984.  He was the editor who brought game theory into Econometrica, and so he played a big role in making Economics the principle home of game theory since then.

Hugo Sonnenschein in 2017

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Update: here's a longer, less hurried obit from U. Chicago

Hugo Sonnenschein, 11th president of the University of Chicago, 1940-2021

and here is one from the Barcelona School of Economics:

In memoriam: Hugo Sonnenschein (1940-2021)

Workshop on Behavioral Game Theory, University of East Anglia, July 15-16

 Here's the announcement:

"Our annual Workshop on Behavioral Game Theory offers leading researchers the opportunity to present current experimental research related to the topic of game theory: the study of strategic interaction using methods of game theory, experimental economics and psychology.  

"The workshop will last for two days on 15 and 16 July. There will be twenty invited speakers along with three plenary talks (see further information below).  

...

"Speakers:

Daniel Friedman, UC Santa Cruz; Yaroslav Rosokha, Purdue University; Heinrich Nax, University of Zurich; Frank Heinemann, TU Berlin; Friederike Mengel, University of Essex; Andis Sofianos, University of Heidelberg; David Gill, Purdue University; Tridib Sharma, ITAM; Alexander Brown, Texas A&M University; Tatiana Kornienko, University of Edinburgh; Xiaomin Li, Caltech; Emanuel Vespa, University of California, San Diego; Evan Calford, Australian National University; Chiara Aina, University of Zurich; Yuval Heller, Bar-Ilan University; Alistair Wilson, University of Pittsburgh; Andy Brownback, University of Arkansas; Manuel Munoz-Herrera, NYU Abu Dhabi; David J Cooper, Florida State University & University of East Anglia; Filippo Massari, University of East Anglia; 

Plenary Speakers: Cristina Bicchieri, University of Pennsylvania; Yan Chen, University of Michigan; Jörgen Weibull, Stockholm School of Economics

International (Stonybrook) Virtual Conference on Game Theory July 5 - 8, 2021

  The program this year looks unusually great. (If it doesn't show up well on mobile, click on the link instead...)  The event is hosted by Virtual Chair and will take place on the Gather.town platform.

International Conference on Game Theory

July 5 - 8, 2021

All times in Eastern Time (GMT -4)

Click on the talk title for more information.

Monday, July 05
09:30 - 10:00	Breakfast
10:00 - 10:30	Jon Kleinberg  (Cornell University) Algorithmic Monoculture and Social Welfare
10:30 - 11:00	Annie Liang  (Northwestern University) Data and Incentives
11:00 - 11:15	Break
11:15 - 11:45	Navin Kartik  (Columbia University) Improving Information from Manipulable Data
11:45 - 13:00	Poster Session
13:00 - 14:00	Robert Wilson  (Stanford University) Large Auctions
14:00 - 14:15	Break
14:15 - 14:45	Peter Cramton  (University of Cologne) Lessons from the 2021 Texas electricity crisis
14:45 - 15:15	Srihari Govindan  (University of Rochester) Toward an Axiomatic Theory of Stability
15:15 - 16:15	Reception for Robert Wilson

 

Tuesday, July 06
09:30 - 10:00	Breakfast
10:00 - 10:30	Michael Kearns  (University of Pennsylvania) Between Group and Individual Fairness for Machine Learning
10:30 - 11:00	Rediet Abebe  (University of California, Berkeley) TBA
11:00 - 11:15	Break
11:15 - 11:45	Jamie Morgenstern  (University of Washington) TBA
11:45 - 12:15	Irene Lo  (Stanford University) TBA
12:15 - 13:00	Meet the Speakers (Monday and Tuesday)
13:00 - 14:00	Jean Tirole  (Tolouse School of Economics) Safe Spaces: Shelters or Tribes?
14:00 - 14:15	Break
14:15 - 14:45	Éva Tardos  (Cornell University) The Virtue of Patience in Strategic Queueing Systems
14:45 - 15:15	Stephen Morris  (MIT) Conflation of Impressions: Market Thickness versus Efficiency

 

Wednesday, July 07
09:30 - 10:00	Breakfast
10:00 - 10:30	Maria-Florina Balcan  (Carnegie Mellon University) TBA
10:30 - 11:00	Benjamin Brooks  (University of Chicago) A Strong Minimax Theorem for Informationally-Robust Auction Design
11:00 - 11:15	Break
11:15 - 11:45	Daniela Saban  (Stanford University) TBA
11:45 - 13:00	Poster Session
13:00 - 13:30	Michael Jordan  (University of California, Berkeley) On Dynamics-Informed Blending of Machine Learning and Game Theory
13:30 - 14:00	Moshe Tennenholtz  (Technion--Israel Institute of Technology) Data Science with Game Theory Flavor
14:00 - 14:15	Break
14:15 - 14:45	Renato Paes Leme  (Google Research) Interactive Communication in Bilateral Trade
14:45 - 15:15	Constantinos Daskalakis  (MIT) TBA

 

Thursday, July 08
09:30 - 10:00	Breakfast
10:00 - 10:30	Marina Halac  (Yale University) Monitoring Teams
10:30 - 11:00	Eran Shmaya  (Stony Brook University) TBA
11:00 - 11:15	Break
11:15 - 11:45	Yiling Chen  (Harvard University) TBA
11:45 - 12:15	Tim Roughgarden  (Columbia University) Transaction Fee Mechanism Design
12:15 - 13:00	Meet the Speakers (Wednesday and Thursday)
13:00 - 14:00	Paul Milgrom  (Stanford University) Reprise of Nobel lecture (Auction Research Evolving: Theorems and Market Designs)
14:00 - 14:15	Break
14:15 - 14:45	Shengwu Li  (Harvard University) Investment Incentives in Near-Optimal Mechanisms
14:45 - 15:15	Susan Athey  (Stanford University) TBA
15:15 - 16:15	Reception for Paul Milgrom