The market for (ethical) pornography

 Will regulation, lawsuits and competition for creators increase the supply of ethical porn?

Wired has the story:

The Sticky Dilemmas of Pornhub’s Next Chapter
Videos of minors. Illegal data collection. Lack of oversight. Lawsuits. Problems have dogged the popular porn site for years. Is its promise of transparency enough for a reset? By Jason Parham

"Kekesi empathized with the performers. It’s part of her job. As vice president of brand and community at Pornhub, the monstrously popular adult entertainment site, she puts in plenty of face time with creators, as well as fans of the platform, the press, and critics. 

...

"She was thrust into the role in 2023, following a particularly turbulent period for the company. On some level, Pornhub has always been controversial—it comes with the territory—but the problems of the platform in recent years represented an existential threat.

"Rumblings began in 2019, when the owners of the GirlsDoPorn and GirlsDoToys websites were charged in a sex trafficking conspiracy for deceiving and forcing women to perform in adult films, which they then uploaded online, including to platforms like Pornhub. In March 2020, Senator Ben Sasse of Nebraska urged the US Department of Justice to open an investigation into Pornhub, citing incidents from “the past year,” including the GirlsDoPorn case. A New York Times column by Nicholas Kristoff that December brought even more attention to accusations that Pornhub hosted videos depicting sexual abuse, including of children. At first Pornhub denied any wrongdoing, but reaction swiftly snowballed.

"In Canada, where Pornhub is based, a parliamentary committee launched an investigation into the allegations. Visa and Mastercard suspended payment processing. Dozens of women sued Pornhub’s parent company, then called MindGeek and since renamed Aylo Holdings, alleging it had created and profited from a “bustling marketplace for child pornography, rape videos, trafficked videos, and every other form of nonconsensual content.”

...

"Pornhub has taken steps to address at least some of these problems. Following the Times article, it scrubbed the site of all “unverified content,” Kekesi said. Now anyone who wants to upload content to Pornhub has to not only verify their own identity; they also must supply proof of consent for everyone who appears in the scene, including documentation, IDs, and other paperwork. Pornhub also started issuing annual “transparency reports,” which it now does twice a year, publishing its content moderation practices. 

...

"Already, 12 US states have instituted age-verification laws around porn consumption. Because PornHub doesn’t want to open itself to litigation under these new laws, it went on the offensive, blocking all access to its site in those states regardless of age.

...

"In general, though, porn is more accessible than ever. Platforms like OnlyFans customize desire for a small fee. The riskier side of the social media site X operates in the vein of the former Backpage.com, where creators use the app to promote their work, engage with fans, and find gigs. That has also meant more competition for Pornhub. Kekesi never says it outright, but this is likely why the company has made a noticeable effort to appease the concerns of adult creators. “We are catching up and trying to be more visible and more present with the creator community,” she said."

Designing Complex Experiments, by Susan Athey and Guido Imbens

 Here's a tantalizing set of slides about online experiments

Designing Complex Experiments: Some Recent Developments SUSAN ATHEY AND GUIDO IMBENS

This is from the 

NBER Summer Institute 2024

SI 2024 Methods Lecture: New Developments in Experimental Design and Analysis

the above link contains pointers to background papers.

Privacy while driving

 Internet connected cars collect lots of data on driving behavior, which can be sold to insurance companies and used to change drivers' insurance rates.

The NYT has the story:

Automakers Are Sharing Consumers’ Driving Behavior With Insurance Companies . LexisNexis, which generates consumer risk profiles for the insurers, knew about every trip G.M. drivers had taken in their cars, including when they sped, braked too hard or accelerated rapidly.   By Kashmir Hill

"LexisNexis is a New York-based global data broker with a “Risk Solutions” division that caters to the auto insurance industry and has traditionally kept tabs on car accidents and tickets. 

...

"In recent years, insurance companies have offered incentives to people who install dongles in their cars or download smartphone apps that monitor their driving, including how much they drive, how fast they take corners, how hard they hit the brakes and whether they speed. But “drivers are historically reluctant to participate in these programs,” as Ford Motor put it in a patent application that describes what is happening instead: Car companies are collecting information directly from internet-connected vehicles for use by the insurance industry.

"Sometimes this is happening with a driver’s awareness and consent. Car companies have established relationships with insurance companies, so that if drivers want to sign up for what’s called usage-based insurance — where rates are set based on monitoring of their driving habits — it’s easy to collect that data wirelessly from their cars.

But in other instances, something much sneakier has happened. Modern cars are internet-enabled, allowing access to services like navigation, roadside assistance and car apps that drivers can connect to their vehicles to locate them or unlock them remotely. In recent years, automakers, including G.M., Honda, Kia and Hyundai, have started offering optional features in their connected-car apps that rate people’s driving. Some drivers may not realize that, if they turn on these features, the car companies then give information about how they drive to data brokers like LexisNexis.

"Automakers and data brokers that have partnered to collect detailed driving data from millions of Americans say they have drivers’ permission to do so. But the existence of these partnerships is nearly invisible to drivers, whose consent is obtained in fine print and murky privacy policies that few read.

"Especially troubling is that some drivers with vehicles made by G.M. say they were tracked even when they did not turn on the feature — called OnStar Smart Driver — and that their insurance rates went up as a result."

Gambling in video games--entry level gambling for minors?

 In-game gambling for video game tools has become an unregulated form of online gambling that may provide minors with their first gambling fix...

The Guardian has the story:

‘It’s rotting young people’s brains’: the murky world of gambling in video games. In-game purchases of bonus items have long been available. But now gamers are being lured into casino-style betting to win them.  by Rob Davies

"For the uninitiated, “skins” are virtual items within a computer game that can be bought for money, or won as a reward for gameplay. Skins might be devastating weapons, a snazzy uniform for a character or – in a football game – a player who could be the missing link to complete an all-conquering team.

...

"Typically, skins are contained in “loot boxes” or “cases”, which gamers pay small sums for without knowing what they will get.

"Loot boxes have already become a lightning rod for controversy due to their gambling-style mechanism, although the UK government has refused to recognise them as gambling products.

"While skins can be found in loot boxes, they can also be bought in the online marketplace operated by online gaming platform Steam – the medium through which many games such as CS:GO are played.

"Through that marketplace, skins can also be transferred between players and into the game. There, competitors can use them to gain an advantage, or just for cosmetic effect.

"What bothered Jeff [a professional video gamer], however, was not so much the loot boxes or the skins in themselves but another phenomenon that they have spawned: skins gambling.

'This works like any other casino. You load up your account with funds, place a bet, watch the graphics spin and either win or lose.

"The big difference in this case is that the casino taking your bet has no gambling licence and, in some cases, no reliable mechanism to stop under-18s getting their first taste of gambling – via an online ecosystem that is, to many parents, a total mystery

...

"Some skins carry enormous price tags in the real world. One website that tracks skin prices values a “Gungnir” sniper rifle, available in the CS:GO game, at more than $18,000. A knife – a “factory new, case-hardened Karambit, pattern 387 (blue gem)” – is reputedly the most expensive CS:GO skin in history, attracting a $1.5m offer that its owner turned down. Further down the scale, guns, outfits, stickers and knives sell for hundreds of dollars.

...

"it can be literally child’s play to turn skins into hard cash. To use sites such as KeyDrop, players must have an account on the Steam platform, which was created by the maker of CS:GO, US-based game developer Valve.

"Steam has its own marketplace, where gamers can trade skins. Gift cards to help gamers buy such skins are big business at Christmas, an obvious choice for anyone with a relative or a friend who loves nothing more than spending hours in front of a game.

"The Steam marketplace is self-contained, at least initially. You can load cash into your wallet and use those funds to buy skins from Steam or from other gamers. You cannot, however, withdraw the funds. In ­theory, therefore, the marketplace is not somewhere you could properly cash out any winnings.

"But an industry has sprung up: third-party marketplaces such as SkinBaron and Skinwallet, where you can sell skins, including those won on gambling sites, for real money."

The Everything Token. By Steve Kaczynski and Scott Duke Kominers

 Here's a look into a possible future of the web (but it's still available in hardcover):

The Everything Token.  HOW NFTS AND WEB3 WILL TRANSFORM THE WAY WE BUY, SELL, AND CREATE.  By Steve Kaczynski and Scott Duke Kominers

"A Harvard Business School professor and a16z crypto research partner and a career marketer and Web3 entrepreneur demystify the coming digital revolution, showing how NFTs will transform our online and offline interactions."

“NFTs were a mystery to me. Thanks to this book, both the economics of NFTs and how businesses can use them are now in sharp focus and no longer mysterious. It helps, too, that the book was so much fun to read!”

— Paul Milgrom, Shirley and Leonard Ely Professor of Humanities and Sciences at Stanford University and Nobel Laureate in Economics"

“You can’t ask for savvier or more enthusiastic guides to the potential of NFTs than Kaczynski and Kominers.”
— Alvin E. Roth, Craig and Susan McCaw Professor of Economics at Stanford University and Nobel Laureate in Economics

###########

Earlier: 

Saturday, November 13, 2021

Non-fungible tokens (NFTs), in Harvard Business Review, by Kaczynski and Kominers

More governments seek to limit TikTok over data concerns

The NYT has the story:

Why Countries Are Trying to Ban TikTok

Governments have expressed concerns that TikTok, which is owned by the Chinese company ByteDance, may endanger sensitive user data.  By Sapna Maheshwari and Amanda Holpuch

“In recent months, lawmakers in the United States, Europe and Canada have escalated efforts to restrict access to TikTok, the massively popular short-form video app that is owned by the Chinese company ByteDance, citing security threats.

The White House told federal agencies on Feb. 27 that they had 30 days to delete the app from government devices. A growing number of other countries and government bodies — including Britain and its Parliament, Canada, the executive arm of the European Union, France and New Zealand’s Parliament — have also recently banned the app from official devices. On April 4, Australia became the latest country to announce that it was prohibiting the TikTok app on government devices on advice from intelligence and security agencies.

On March 1, a House committee backed an even more extreme step, voting to advance legislation that would allow President Biden to ban TikTok from all devices nationwide. 

…

“Lawmakers and regulators in the West have increasingly expressed concern that TikTok and its parent company, ByteDance, may put sensitive user data, like location information, into the hands of the Chinese government. They have pointed to laws that allow the Chinese government to secretly demand data from Chinese companies and citizens for intelligence-gathering operations. They are also worried that China could use TikTok’s content recommendations for misinformation.

…

“India banned the platform in mid-2020, costing ByteDance one of its biggest markets, as the government cracked down on 59 Chinese-owned apps, claiming that they were secretly transmitting users’ data to servers outside India.”

Privacy and data gathered by home devices

 Does your robot vacuum cleaner make a map of your house as it moves around, and store it on the web?  Could the fact that your kitchen chairs haven't moved all week allow someone to know that no one is home?  These are the kinds of things that people worry about when thinking of all the data collected by smart devices.

The Washington Post has this story:

Tour Amazon’s dream home, where every appliance is also a spy. Here’s everything Amazon learns about your family, your home and you.  by Geoffrey A. Fowler

"Echo speaker

"Echos respond to the wake word “Alexa” to summon the voice assistant to play music, answer questions, shop and control other devices.

"What it knows: Collects audio recordings through an always-on microphone; keeps voice IDs to differentiate users; detects coughs, barks, snores and other sounds; logs music and news consumption; logs smart-home device activity and temperature; detects presence of people though ultrasound.

"Ring doorbell

"What it knows: Live and recorded video, audio and photos of the outside of your house; when people come and go and you receive packages; status of linked devices like lights.

...

"Kindle or Fire Tablet

"What it knows: What and when you read and watch entertainment and news; when you open, close and how long you use third-party apps; your location.

"Why that matters: Amazon knows exactly how fast you read and how far you actually got through your last novel. Kindles and Fire Tablets are another way Amazon gets to know your tastes, which helps it sell you things.

...

"Roomba vacuum cleaner

"A vacuum cleaner that automatically roams around your house to clean, which Amazon is acquiring in a still-pending deal for $1.7 billion.

"What it knows: Camera identifies obstacles and layout of rooms and furniture; when, how often and where you clean.

"Why that matters: When the deal was announced, some Roomba owners balked at the idea that Amazon might gain access to maps of their home, created by the robots to help them clean. "

Matching versus menus

When preferences are simple, marketplaces can match you quickly, e.g. Uber knows travelers want a nearby car that will come quickly, so it gives drivers some choices but matches travelers without asking them much. But Airbnb knows that travelers might have complex preferences, so it gives them a menu of choices to look at.

Here's a forthcoming paper by Peng Shi on what's going on.

Shi, Peng. "Optimal Matchmaking Strategy in Two-sided Marketplaces." Management Science (2022).

Abstract: Online platforms that match customers with suitable service providers utilize a wide variety of matchmaking strategies; some create a searchable directory of one side of the market (i.e., Airbnb, Google Local Finder), some allow both sides of the market to search and initiate contact (i.e., Care.com, Upwork), and others implement centralized matching (i.e., Amazon Home Services, TaskRabbit). This paper compares these strategies in terms of their efficiency of matchmaking as proxied by the amount of communication needed to facilitate a good market outcome. The paper finds that the relative performance of these matchmaking strategies is driven by whether the preferences of agents on each side of the market are easy to describe. Here, “easy to describe” means that the preferences can be inferred with sufficient accuracy based on responses to standardized questionnaires. For markets with suitable characteristics, each of these matchmaking strategies can provide near-optimal performance guarantees according to an analysis based on information theory. The analysis provides prescriptive insights for online platforms.

In defense of online anonymity, by Mike Luca in the WSJ

Mike Luca writes about anonymity as a feature of market design, in the WSJ:

In Defense of Online Anonymity. Lack of transparency on the internet may help fuel toxic dialogue, but it also encourages honest feedback and protects people against discrimination  By Michael Luca

"Anonymity on the internet has gotten a bad rap lately, and for good reason. The shield of anonymity has contributed to a toxic online ecosystem that is too often marred by cyberbullying, misinformation and other social ills. Removing anonymity has the potential to foster accountability and trust. 

...

"But this overlooks an important fact: The internet needs some anonymity.  ...The relatively anonymous nature of online transactions removed markers of race, gender and other factors that sometimes were used to discriminate against customers in conventional transactions.

...

"As an economist studying the design of markets and platforms, I concentrate on whether companies are creating ecosystems that are both efficient and inclusive. My collaborators Ben Edelman, Dan Svirsky and I set out to understand the implications of Airbnb’s design choices. In 2015 we conducted an audit study, building on an approach used to analyze labor markets and offline rental markets. We sent identical booking requests to thousands of hosts, varying only the user’s name—using some names that birth records show to be more common among Black Americans and other names that are more common among white Americans. We found that the Black “guests” were roughly 16% less likely to be accepted, and the discrimination was similar whether hosts had only a single listing or multiple ones.

"In response to our research, Airbnb commissioned a task force and then gradually reintroduced anonymity at various steps in the process. Since 2018, hosts have been required to make a decision about whether to accept or reject a guest before seeing their picture. In Oregon, the site has been spurred to go further by a lawsuit from Airbnb customers there who alleged discrimination on the basis of their names. Since January, the names of Oregon-based guests are no longer disclosed before owners accept their bookings.

...

"Of course, anonymity needs to be implemented thoughtfully and comes with its own risks; the same anonymity that can help to protect honest feedback might protect illegitimate feedback as well. My research with Giorgos Zervas, published in the journal Management Science in 2016, found evidence of businesses extensively engaging in fake reviews, enabled in part by the shield of anonymity. Work by economists Dina Mayzlin, Yaniv Dover and Judy Chevalier, published in the American Economic Review in 2014, found that fake reviews are more common when there is less verification of reviews. Anonymity can also make us feel more disconnected even while exchanging views."

Virtual interviewing increased the number of interviews by (and of) candidates for medical residencies

 Here's an article on virtual interviewing of candidates for medical residencies (about which, see also this post about Erling Skancke's work on interviewing):

Beshar I, Tate WJ, Bernstein D. Residency interviews in the digital era, Postgraduate Medical Journal Published Online First: 05 October 2021. doi: 10.1136/postgradmedj-2021-140897

"Halfway through the interview cycle, however, questions were raised about system-level equity of virtual interviewing. In December 2020, the Association of American Medical Colleges (AAMC) released an open letter citing ‘a maldistribution in residency interview invitations’, with the ‘highest tier applicants hav(ing) so many interviews’.15 The letter, addressed to both programme directors and students, called on programmes ‘to recruit a diverse pool of residents’ and encouraged students ‘to release[e] some interviews if you are holding more than needed, allowing your fellow students to access those interview opportunities’.15 Medical school deans began encouraging competitive students to forgo interviews. In the words of the Dean of students at the UC College of Medicine: ‘They need to identify a reasonable number to have a successful match and release others so their peers who need them can have them’.6 By some estimates, programmes invite the same pool of highly qualified applicants, with just 7%–21% of the applicant pool filling 50% of the interview slots in some specialties.16 Meanwhile, a survey of plastic surgery programme directors demonstrated nearly one in three increased the number of interview offers per available residency spot.

"At our institution—Stanford School of Medicine—and as applicants of the 2020–2021 cycle ourselves—we saw the effect of this firsthand. We administered a survey to all students participating in the match process in both the 2019 (in-person) and 2020 (virtual) years. In the survey, respondents identified the residency programme or programmes to which they applied as well as the number of interviews they attended. Of Stanford’s 2019 and 2020 graduating classes, 83.7% (n=72) and 62.3% (n=62), respectively, completed our survey.

"Of the 2019 applicants, 97.2% (n=70) reported residency interviews that required airline travel, compared with 0% of the 2020 applicants. The median number of interviews for the 2019 applicants was 8, compared with 14 for the 2020 applicants. Across the 2 years analysed, all fields showed an increase in the number of interviews accepted (table 1). Of the four fields with the most applicants, the largest per cent change was in anaesthesia (244%), followed by ophthalmology (216%), internal medicine (144%) and psychiatry (128%), respectively. On average, across all specialties, the number of accepted interviews changed by 160%.

Online and Matching-Based Market Design (forthcoming in 2022), edited by Echenique, Immorlica, and Vazirani

 What to read in 2022? Here's a teaser...

Online and Matching-Based Market Design, forthcoming in 2022 from Cambridge University Press

Editors: Federico Echenique, Nicole Immorlica, Vijay V. Vazirani  

With a Foreword by Alvin E. Roth

The publisher's leaflet describes the book this way:

"The field of matching markets is, due to a unique confluence of circumstances, at the same time mature and yet in its infancy. Its birth goes back to the seminal 1962 paper of Gale and Shapley on stable matching. Over the decades, this field has become known for its highly successful applications, having economic as well as sociological impact. Its recent resurgence, with the revolutions of the Internet and mobile computing, has opened up altogether new avenues of research and novel, path-breaking applications. The distinctive feature of this book lies in treating this field in its true interdisciplinary spirit --- the field veritably sits at the intersection of economics, computer science, operations research and discrete mathematics, and this viewpoint has already led to a sequence of fundamental research results. Comprised of chapters written by over 50 top researchers, it still has the clarity, cohesiveness and organization of a textbook."

CONTRIBUTORS: Atila Abdulkadiroglu, Nikhil Agarwal, Samson Alva, Itai Ashlagi, Mariagiovanna Baccara, Gabriel Carroll, Hector Chade, Jiehua Chen, Yan Chen, Nikhil Devanur, Federico Echenique, Lars Ehlers, Matthew Elliott, Michal Feldman, Zhe Feng, Tamas Fleiner, Alfred Galichon, Renato Gomes, Aram Grigoryan, Guillaume Haeringer, Hanna Halaburda, John Hatfield, Zhiyi Huang, Nicole Immorlica, Ravi Jagadeesan, Philipp Kircher, Bettina Klaus, Robert Kleinberg, Scott Kominers, Soohyung Lee, Jacob Leshno, Shengwu Li, Irene Lo, Brendan Lucier, David Manlove, Aranyak Mehta, Paul Milgrom, Jamie Morgenstern, Thanh Nguyen, Alexandru Nichifor, Michael Ostrovsky, David Parkes, Alessandro Pavan, Marek Pycia, Aaron Roth, Bernard Salanie, Aleksandrs Slivkins, Paulo Somaini, Sai Srivatsa Ravindranath, Eduard Talamas, Alexander Teytelboym, Thorben Tröbst, Vijay Vazirani, Andrew Vogt, Rakesh Vohra, Alexander Westkamp, Leeat Yariv

Technology and Equality in the Digital Era--Luohan Academy

 Last week I participated in a Luhohan Academy discussion called 

Boosting Shared Prosperity: Technology and Equality in the Digital Era

Speakers : David Autor, Erik Berglof, Long Chen, Hanming Fang, Ginger Jin, Alvin Roth, Tom Sargent, Michael Schwarz, Michael Spence, Steve Tadelis, Robert Townsend,

I discussed the presentations by David Autor and Rob Townsend.

Here's the video (on YouTube):

Here's a Symposium summary.

OnlyFans announces then reverses a ban on explicit sexual content

 Here's a story from the Guardian, following the reported decision of the website OnlyFans to ban certain sexually explicit content, and then another reversing that announcement:

OnlyFans ban on sexually explicit content will endanger lives, say US sex workers, by Kari Paul

"American sex workers say subscription website OnlyFans’ decision to ban “sexually explicit” content will threaten their livelihoods, drive more of the industry underground, and ultimately endanger lives.

“They are taking away our safe spaces,” said Jane, an activist and OnlyFans creator who asked to be identified only by her first name. “Nobody wants to protect us.”

...

"Activists say the banning of pornographic content will push more people into danger. “This change will put workers on the street who could otherwise afford rent, it will starve the children of sex workers who could otherwise afford to feed them, and it will force workers currently working remotely online into riskier street-based sex work,” said Mary Moody, an online sex worker and co-chair of the Adult Industry Laborers and Artists Association.

...

“For people who made a living off studio porn previously, the move to OnlyFans has meant significantly more control over safety, partner choice and representation – particularly important for performers of color and trans people,” she said. “This decision will move control and profit back into producers’ hands.”

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

And here's a followup from Fortune:

OnlyFans tries to win back its spurned lovers BY ROBERT HACKETT  AND DECLAN HARTY August 25

"After an outpouring of shock, dismay, and betrayal from its once and former fans, OnlyFans said Wednesday it was reversing a week-old decision to ban sexually explicit content on its service. "

The internet hybrid of pornography and sex work on OnlyFans

 Sex work is mostly  about in-person, one-on-one, personal encounters.  Pornography is mostly about publishing, whether in print or other media, so it is mostly about trying to reach a wider audience (even if a specialized one).  The internet has given birth to something in between, as exemplified by OnlyFans, a site that allows online communication of a sexual sort to be personalized, via individual subscriptions to personalized content, or micro-subscriptions to particular, paywall protected content. (The motto on their front page reads "Sign up to make money and interact with your fans!")  It grew a lot during the pandemic.

The NY Times has a story that likens it to a strip show with private rooms, in which the show on center stage is an invitation for fans and performers to interact more privately. Star performers can make real money, although most performers aren't stars.  

OnlyFans Isn’t Just Porn  By Charlotte Shane

"OnlyFans was founded in 2016, though its bland design makes it look like a relic from an older era. Its interface isn’t attractive, but it is familiar and easy to navigate, like a pared-down, browser-based version of Instagram or Twitter. (An OnlyFans smartphone app does not currently exist; it wouldn’t be allowed on the App Store or Google Play because of its X-rated content.) In December 2019, the platform had a user base of 17 million, which means that at some point during the pandemic, it started averaging as many new registrations per month as it had in a previous year.

...

"Though OnlyFans’ representatives seem to distance the site from its sexual content, the platform is synonymous with porn. Its naughty cachet attracts celebrities, whose presence on the site garners a disproportionate amount of attention. When Cardi B joined last August, she made headlines. (“No, I’m not going to be showing my titties,” she warned, but she did promise behind-the-scenes content from her risqué “WAP” music video with Megan Thee Stallion.) Celebrities use the site because they know that regardless of a creator’s stated career (chef, fitness trainer and influencer are popular), OnlyFans’ draw is the promise of seeing that which is normally unseen. 

...

"In this virtual strip club, as in the brick-and-mortar club, there are wide discrepancies in pay. Some performers leave with $100, while other hustlers go home with ten times as much. Established porn stars who before the pandemic could rake in thousands per night by appearing as a strip joint’s “featured dancer” enjoy a similar, even more lucrative power on OnlyFans. 

...

"“OnlyFans is buying houses for girls,” she told me. “It is supporting sex workers’ families. It’s everything that people are saying.” But like the misleading caption used to sell a celebrity’s locked posts, what people say can be accurate while failing to tell the truth.

...

"OnlyFans was perfectly positioned to become a housebound population’s go-to source for explicit material because of what is called the gentrification of the internet. In the context of sex work, this refers to an aggressive pattern of policing both the sex trade and the people who work in it.

"In the United States, this regulatory campaign can be traced back to the federal government’s protracted and ultimately successful crusade against Craigslist’s Erotic Services in the early 2010s. Since then, the F.B.I. and federal prosecutors have systematically targeted a slew of sites that cater to sex workers, particularly advertising platforms like Backpage, which shuttered in 2018 after a multiyear effort by California’s attorney general at the time, Kamala Harris. In April that year, the bills known collectively as FOSTA-SESTA, which further criminalize communication around commercial sex, were signed into law by Donald Trump.

Limiting job applications in an online labor market: by John Horton and Shoshana Vasserman

 Here's an experiment that involved limiting the number of applications to particular jobs in an online labor market, in which many applicants are likely close substitutes.

Job-Seekers Send Too Many Applications: Experimental Evidence and a Partial Solution by John J. Horton and Shoshana Vasserman

Abstract: As job-seekers internalize neither the full benefits or costs of their application decisions, job openings do not necessarily obtain the socially efficient number of applications. Using a field experiment conducted in an online labor market, we find that some job openings receive far too many applications, but that a simple intervention can improve the situation. A treated group of job openings faced a soft cap on applicant counts. However, employers could easily opt out by literally clicking a single button. This tiny imposed cost on the demand side had large effects on the supply side, reducing the number of applicants to treated jobs by 11%—with even larger reductions in jobs where additional applicants were likely to be inframarginal. This reduction in applicant counts had no discernible effect on the probability a hire was made, or in the quality of the subsequent match. This kind of intervention is easy to implement by any online marketplace or job board and has attractive properties, saving job-seekers effort while still allowing employers with high marginal returns to more applicants to get them.

"In this paper, we describe an experiment conducted in an online labor market that influenced the size of applicant pools faced by employers.1 This was done by imposing a soft cap on the number of applicants that a job opening could receive, as well as limiting the duration of the window of time during which applications could be received: when a job opening received 50 applicants—or when 120 hours (5 days) had passed—no more applicants could apply unless the employer explicitly asked for more applicants. The intent of the intervention was to prevent job-seekers from applying to jobs where their application was likely to either be ignored or simply displace some other applicant, without preventing employers with high marginal returns to more applicants from obtaining them.

...

There is no evidence that better or worse matches were made in the treatment group, as measured by the feedback given by the employer at the end of the contract or in hours-worked. If anything, employer satisfaction rose slightly in the treatment.

The lack of effects on hiring or match quality is seemingly surprising, but likely reflects the fact that price competition among workers “prices in” vertical differences among workers, leaving firms close to indifferent over applicants, as in Romer (1992). Because of this indifference, substitution among applicants is not very costly to employers.

...

"only about 7% of employers requested more applicants by pushing the button.

"The treatment intervention likely saved job-seekers substantial time—more so than the percentage changes in job post applicant counts would seemingly imply. To see why the treatment has out-sized effects on job seekers, note that although relatively few job openings were affected by the 50 applicant cap (about 10%), these job openings are disproportionately important to job-seekers, as they attracted 43% of applications. This difference simply reflects the fact that a randomly selected application is more likely to be sent to a job with a high applicant count.

Cloud Pricing: The Spot Market Strikes Back, by Dierks and Seuken in Management Science

 Sven Seuken writes:

"I just read your blog post about the new paper on economics of cloud computing, which is very interesting. Given that you highlighted the authors' thoughts on why auctions are not used in cloud computing markets, I thought you might be interested in a recent paper coming out of my group, which was just published at Management Science: https://pubsonline.informs.org/doi/10.1287/mnsc.2020.3907

"In our model, we assume that a cloud provider must *always* offer a standard, non-preemptible fixed-price market (because only this satisfies many customers' business needs, which is in line with the arguments that Hummel and Schwarz provide). But we show that a cloud provider can typically increase her profit and create a Pareto improvement for the users by *additionally* selling idle instances on a preemptible spot market (e.g., via an auction).

"Here's the paper and abstract:

Cloud Pricing: The Spot Market Strikes Back

Ludwig Dierks , Sven Seuken 

Published Online:25 Feb 2021 https://doi.org/10.1287/mnsc.2020.3907

Abstract: Cloud computing providers must constantly hold many idle compute instances available (e.g., for maintenance or for users with long-term contracts). A natural idea, which should intuitively increase the provider’s profit, is to sell these idle instances on a secondary market, for example, via a preemptible spot market. However, this ignores possible “market cannibalization” effects that may occur in equilibrium as well as the additional costs the provider experiences due to preemptions. To study the viability of offering a spot market, we model the provider’s profit optimization problem by combining queuing theory and game theory to analyze the equilibria of the resulting queuing system. Our main result is an easy-to-check condition under which a provider can simultaneously achieve a profit increase and create a Pareto improvement for the users by offering a spot market (using idle resources) alongside a fixed-price market. Finally, we illustrate our results numerically to demonstrate the effects that the provider’s costs and her strategy have on her profit.

Some economics of providing cloud computing, by Microsoft economists Hummel and Schwarz

 Here's a paper on an aspect of cloud computing by two Microsoft economists. (Microsoft's cloud service is called Microsoft Azure.)  In addition to the capacity question the paper models, it presents a brief, clear overview of the market for cloud computing.

Efficient Capacity Provisioning for Firms with Multiple Locations: The Case of the Public Cloud  by Patrick Hummel∗ and Michael Schwarz*   March 26, 2021

Abstract: This paper presents a model in which a firm with multiple locations strategically chooses capacity and prices in each location to maximize efficiency. We find that the firm provisions capacity in such a way that the probability an individual customer will be unable to purchase the goods the customer desires is lower in locations with greater expected demand. The firm also sets lower prices in larger locations. Finally, we illustrate that if a customer is indifferent between multiple locations, then it is more efficient to place this customer in a location with greater expected demand. These theoretical results are consistent with empirical evidence that we present from a major public cloud provider.

"2.1 Industry Overview

"The cloud computing industry is young, large, and rapidly growing. Although some of the concepts behind the public cloud were developed as early as the 1960s, all modern public clouds first emerged in the 21st century (Foote 2017). Today annual world cloud revenues exceed $250 billion and are expected to grow by another 20% in 2021 (Graham et al. 2020a).

"The public cloud consists of a wide range of services including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). SaaS involves providing applications such as web-based email and productivity software to a consumer that can be accessed via the Internet. PaaS provides a platform for deploying consumer created applications using the provider’s programming languages, libraries, and tools.

"And IaaS provisions fundamental computing resources such as processing, storage, and network to a consumer that can be used to deploy and run arbitrary software (Mell and Grance 2011)."

...

"2.5 Why Auctions are Not Used

...

"Since cloud providers provision enough capacity to almost always be able to meet demand, if a cloud provider used an auction to sell compute to customers, the final price at the auction would almost always be equal to the reserve price. However, since cloud customers typically have a value per unit of compute that is orders of magnitude higher than the corresponding capacity costs, in the rare event that there was not enough capacity to meet all demand, the final price in an auction would be dramatically higher

than the cloud provider’s costs. Thus, if a cloud provider used an auction to sell compute to customers, there would be a very high probability that all customers could obtain all the compute they wanted at a low price and a low probability that the final price would

be very high.

"There are two problems with this pricing that would make auctions unsuitable in practice. First, using an auction results in a very high amount of uncertainty about the final realized prices. Thus, if either the cloud provider or the cloud customers are at all risk averse, using an auction to set prices will not meet either the cloud provider’s or the cloud customers’ needs.

"Second, under an auction a cloud provider has a far stronger incentive to underinvest in capacity than under a fixed price mechanism. Under a fixed price mechanism, the cloud provider’s revenue can only go down as a result of underinvesting in capacity, as the cloud provider will not be able to service as much demand. But under an auction, underinvesting in capacity will significantly increase a cloud provider’s revenue by increasing the probability that there will not be enough capacity to meet demand, thereby increasing the probability that the final price in the auction will be very high. Thus, using a fixed price mechanism also enables a cloud provider to more credibly commit to provision the efficient amount of capacity. We illustrate these points formally in Appendix A in the

paper."

Anger at vaccine line jumping

 There is some tension between getting populations vaccinated quickly and ensuring that priorities for who gets vaccinated first are carefully followed.  In some places we have seen the costs of adhering too strictly to priorities when enough high priority people are hard to find quickly.  In other places we see the costs of ignoring priorities.

Here's a NY Times story on corruption in South America (followed by a Guardian story about the difficulty of stopping tech-savvy Californians from grabbing appointments meant for underserved minorities):

‘V.I.P. Immunization’ for the Powerful and Their Cronies Rattles South America. A wave of corruption scandals is exposing how the powerful and well-connected in South America jumped the line to get vaccines early. Public dismay is turning into anger.   By Mitra Taj, Anatoly Kurmanaev, Manuela Andreoni and Daniel Politi

"The hope brought by the arrival of the first vaccines in South America is hardening into anger as inoculation campaigns have spiraled into scandal, cronyism and corruption, rocking national governments and sapping trust in the political establishment.

"Four ministers in Peru, Argentina and Ecuador have resigned this month or are being investigated on suspicion of receiving or providing preferential access to scarce coronavirus shots. Prosecutors in those countries, and in Brazil, are examining thousands more accusations of irregularities in inoculation drives, most of them involving local politicians and their families cutting in line.

...

“People find it much more difficult to tolerate corruption when health is at stake,” said Mariel Fornoni, a pollster in Buenos Aires.

The brazen nature of some of the scandals — which mirror similar affairs in Lebanon, Spain and the Philippines — has outraged the region.

...

"Earlier this month, the doctor conducting Peru’s first vaccine trial acknowledged inoculating nearly 250 politicians, notables and their relatives, as well as university administrators, interns and others, with undeclared extra doses. Some had received three doses, according to the trial’s director, Dr. Germán Málaga, in an attempt to maximize their immunity."

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

And here's the Guardian, on California:

California vaccine sites see misuse of codes meant to prioritize Black and Latino residents  by Vivian Ho

"Access codes meant to give Californians of color priority access to Covid-19 vaccine slots have been getting passed around among other residents in the state, allowing some to cut the line and get appointments meant for underserved Black and Latino residents.

Misuse of these codes was reported at vaccine sites in Los Angeles and the Bay Area, said Brian Ferguson, spokesperson for the California office of emergency services, to the Guardian.

"The codes were one of the tools devised by California leaders to address inequities in vaccine distribution in the state. They were given out to leaders and non-profits in the Black and Latino communities in LA and the Bay Area to administer to eligible individuals...

"Instead, the codes ended up passed on by text message and email, oftentimes with misinformation. “My daughter says that the Oakland Coliseum needs to fill up appointment slots in the next few days to prevent spoilage of excess vaccines!” read an email that Oakland resident Jhumpa Bhattacharya received from a friend on Monday. “If you are interested in getting a vaccine before this Wednesday, the link and access code are pasted below."

...

"State officials thought that by handing out vaccine access codes through community leaders, they would bridge any cultural or language barriers while also addressing the issue of the digital divide by giving these eligible individuals special access to the website, Ferguson said. “We don’t want people to be able to get appointments based on who has the fastest internet connection,” he said.

"Since learning of the misuse, the state will begin issuing individualized codes rather than group codes next week. In addition to these codes, the state has been setting up mobile vaccination clinics in these specific communities in hopes of reaching these underserved residents."