Showing posts with label papers. Show all posts

Wednesday, November 2, 2022

Managing inter-district school choice, by Yuchiro Kamada and Fuhito Kojima

Here's a paper that considers inter-district school choice, motivated by Tokyo day care centers. I think a similar problem arises in the EU in allocating foreign study opportunities for college students.

Ekkyo Matching: How To Connect Separate Matching Markets For Welfare Improvement By Yuichiro Kamada And Fuhito Kojima

Abstract. "We consider a school-choice matching model that allows for inter-district transfer of students, with the “balancedness” constraint: each student and school belongs to a region, and a matching is said to be balanced if, for each region, the outflow of students from that region to other regions is equal to the inflow of students from the latter to the former. Using a directed bipartite graph defined on students and schools, we characterize the set of Pareto efficient matchings among those that are individually rational, balanced and fair. We also provide a polynomial-time algorithm to compute such matchings. The outcome of this algorithm weakly improves student welfare upon the one induced when each region independently organizes a standard matching mechanism"

" In Japan ... allocation of slots at accredited daycares are conducted by individual municipal governments and, with few exceptions, a child can only attend a daycare in the municipality of their residence. The City of Tokyo, for example, is divided into 23 small municipalities ... and each conducts a matching independently. Due to the small sizes of the regions, many families would find inter-district admissions—which is called the ekkyo admission ... to be a viable option. Moreover, as a large metropolitan area, many people cross a city boundary to commute, making it potentially more convenient to put their children to a daycare center close to their workplace"

Sunday, October 30, 2022

2022 Exeter Prize to Sandro Ambuehl, Douglas Bernheim, and Axel Ockenfels

Here's an announcement in an email from the Economic Science Association (ESA):

"We are happy to announce the winners of the 2022 Exeter Prize for the best paper published in the previous calendar year in a peer-reviewed journal in the fields of Experimental Economics, Behavioural Economics and Decision Theory.

The winners are Sandro Ambuehl (University of Zurich), Douglas Bernheim (Stanford University), and Axel Ockenfels (University of Cologne) for their paper “What motivates paternalism? An experimental study”, published in The American Economic Review.

There is a growing interest in how “choice architects” design choices for others. This paper provides new insights about how and why people in the role of a choice architect limit the decisions of others. Ambuehl, Bernheim and Ockenfels use the tools of experimental economics to study how subjects help other subjects (“choosers”) to be more patient in tempting intertemporal choices (in which a small, immediate outcome is pitted against a large, delayed outcome). A key result is that choice architects do act to restrict the choice set of choosers to help them avoid temptation. A key strength the paper is offering insight into the motivations behind this decision. The paper proposes and tests two possible motivations: 1) A “mistakes-projective paternalism” in which the choice architect assumes others share his/her susceptibilities to temptations and uses choice sets to minimize temptations and 2) an “ideals-projective paternalism” in which the choice architect assumes others follow his/her values and limit the choice set to those valued outcomes. The results provide clear evidence for the latter motivation. The paper provides evidence about additional beliefs and motivations. Choice architects believe that they are improving the welfare of choosers and they underestimate how many people they are affecting with their restrictions. Finally, the behavior of choice architects in the laboratory predicts support for real-world paternalistic policies (regarding, for example, taxes on alcohol and tobacco) and the motivation to make choices harder is consistent with “ideals-projective paternalism.”

The winning paper was selected by the panel of Rick Larrick (Duke University), Muriel Niederle (Stanford University), and Tomasz Strzalecki (Harvard University)."

Monday, October 24, 2022

Informationally Simple Incentives by Simon Gleyze and Agathe Pernoud

Agathe Pernoud is on the Economics job market from Stanford this year, and is interested in the properties of information in environments in which agents may need to learn their own preferences.

Here are two papers that advance the theory of those situations, and expand on the fragility of 'dominant strategies' as the strategy space is enlarged.

Informationally Simple Incentives by Simon Gleyze and Agathe Pernoud, Journal of Political Economy, forthcoming.

Abstract: We consider a mechanism design setting in which agents can acquire costly information on their preferences as well as others’. A mechanism is informationally simple if agents have no incentive to learn about others’ preferences. This property is of interest for two reasons: First, it is a necessary condition for the existence of dominant strategy equilibria in the extended game. Second, this endogenizes an “independent private value” property of the interim information structure. We show that, generically, a mechanism is informationally simple if and only if it satisfies a separability condition which rules out most economically meaningful mechanisms."

Tuesday, October 11, 2022

Sorority rush: the paper and the podcast

Years ago, my late student Sue Mongell and I wrote a paper about sorority rush:

Mongell, Susan, and Alvin E. Roth. "Sorority rush as a two-sided matching mechanism." The American Economic Review (1991): 441-464.

Just over 20 years later, you can listen to a short NPR broadcast about it on Planet Money (which leaves out a few of the details;-)

THE INDICATOR FROM PLANET MONEY

The economics behind sorority rush

October 5, 2022 by WAILIN WONG and ADRIAN MA

8-Minute Listen

"how do new recruits land at their sorority houses?

"The answer lies in a classic economic concept used in contexts ranging from organ donation to New York public high schools. Today, we're exploring matching markets"

Thursday, September 29, 2022

What is needed to gain support for effective algorithms in hiring, etc?

Here's an experiment motivated in part by European regulations on transparency of algorithms.

Aversion to Hiring Algorithms: Transparency, Gender Profiling, and Self-Confidence by Marie-Pierre Dargnies, Rustamdjan Hakimov and Dorothea Kübler

Abstract: "We run an online experiment to study the origins of algorithm aversion. Participants are either in the role of workers or of managers. Workers perform three real-effort tasks: task 1, task 2, and the job task which is a combination of tasks 1 and 2. They choose whether the hiring decision between themselves and another worker is made either by a participant in the role of a manager or by an algorithm. In a second set of experiments, managers choose whether they want to delegate their hiring decisions to the algorithm. In the baseline treatments, we observe that workers choose the manager more often than the algorithm, and managers also prefer to make the hiring decisions themselves rather than delegate them to the algorithm. When the algorithm does not use workers’ gender to predict their job task performance and workers know this, they choose the algorithm more often. Providing details on how the algorithm works does not increase the preference for the algorithm, neither for workers nor for managers. Providing feedback to managers about their performance in hiring the best workers increases their preference for the algorithm, as managers are, on average, overconfident."

"Our experiments are motivated by the recent debates in the EU over the legal requirements for algorithmic decisions. Paragraph 71 of the preamble to the General Data Protection Regulation (GDPR) requires data controllers to prevent discriminatory effects of algorithms processing sensitive personal data. Articles 13 and 14 of the GDPR state that, when profiling takes place, people have the right to “meaningful information about the logic involved” (Goodman and Flaxman 2017). While the GDPR led to some expected effects, e.g., privacy-oriented consumers opting out of the use of cookies (Aridor et al. 2020), the discussion over the transparency requirements and the constraints on profiling is still ongoing. Recently, the European Parliament came up with the Digital Services Act (DSA), which proposes further increasing the requirements for algorithm disclosure and which explicitly requires providing a profiling-free option to users, together with a complete ban on the profiling of minors. Our first treatment that focuses on the workers aims at identifying whether making the algorithm gender-blind and therefore unable to use gender to discriminate, as advised in the preamble of the GDPR and further strengthened in the proposed DSA, increases its acceptance by the workers. The second treatment is a direct test of the importance of the transparency of the algorithm for the workers. When the algorithm is made transparent in our setup, it becomes evident which gender is favored. This can impact algorithm aversion differently for women and men, for example if workers’ preferences are mainly driven by payoff maximization.

"The treatments focusing on the managers’ preferences aim at understanding why some firms are more reluctant than others to make use of hiring algorithms. One possible explanation for not adopting such algorithms is managerial overconfidence. Overconfidence is a common bias, and its effect on several economic behaviors has been demonstrated (Camerer et al. 1999, Dunning et al. 2004, Malmendier and Tate 2005, Dargnies et al. 2019). In our context, overconfidence is likely to induce managers to delegate the hiring decisions to the algorithm too seldom. Managers who believe they make better hiring decisions than they actually do, may prefer to make the hiring decisions themselves. Our paper will provide insights about the effect of overconfidence on the delegation of hiring decisions to algorithms. Similar to the treatments about the preferences of workers, we are also interested in the effect of the transparency of the algorithm on the managers’ willingness to delegate the hiring decisions. Disclosing the details of the algorithm can increase the managers’ trust in the algorithm."

Saturday, September 24, 2022

Improving refugee resettlement: insights from market design by Justin Hadad and Alexander Teytelboym

The Autumn 2022 issue of the Oxford Review of Economic Policy is about forced migration. Here's a paper directly related to market design.

Improving refugee resettlement: insights from market design by Justin Hadad and Alexander Teytelboym, Oxford Review of Economic Policy, Volume 38, Issue 3, Autumn 2022, Pages 434–448, https://doi.org/10.1093/oxrep/grac013, 15 September 2022

Abstract: The current refugee resettlement system is inefficient because there are too few resettlement places and because refugees are resettled to locations where they might not thrive. We outline how ideas from market design can lead to better resettlement practices. In particular, we discuss how market design can incentivize participation of countries in resettlement and improve the matching of refugees at international and local levels; some of these insights have already put into practice. Finally, we highlight several further applications of market design in refugee resettlement, including cardinal preference submission and matching with transfers.

"There is an acute shortage of resettlement. Resettlement is a public good from the point of view of countries (i.e. if one country contributes by resettling a refugee, all other countries benefit), so it is not surprising that it is underprovided (Moraga and Rapoport, 2014). The UNHCR predicts that 1.47 million refugees will need resettlement in 2022––the highest ever number (UNHCR, 2021e). Numbers of resettled refugees fluctuate—in part driven by need, and in part driven by the willingness of the largest hosting countries, such as the United States, to resettle (see Figure 1). The refugees in need of resettlement are the most vulnerable kinds of refugees (see Figure 2); they have often suffered persecution and violence above and beyond the terrible experiences of most refugees.

...

"The UNHCR is responsible for sending the applications of refugees to resettling countries. The process works as follows: the UNHCR identifies a refugee family in need of resettlement, and submits an application on their behalf to a country that may resettle them. If the application is accepted, the country becomes responsible for resettling the refugee according to its own rules; if the application is rejected, the UNHCR can submit an application to another country. The process can take months, if not years. Given the shortage of resettlement places, the UNHCR has a strong incentive to maximize the expected number of successful applications rather than to try to find the best matches between refugees and countries. In 2020, the UNHCR submitted the applications of over 39,500 refugees to resettling countries, which led to just 22,800 individuals departing to these countries (UNHCR, 2021d). This suggests that there is potential to improve the allocation of international resettlement submissions."

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Here's the rest of the issue: