Organs for transplant: supply and demand

An interesting post at Freakonomics brings to attention a paper in the International Journal of Health Services by Herring, Woolhandler, and Himmelstein titled
INSURANCE STATUS OF U.S. ORGAN DONORS AND TRANSPLANT RECIPIENTS: THE UNINSURED GIVE, BUT RARELY RECEIVE

The subtitle tells much of the story, the paper finds that "16.9 percent of organ donors but only 0.8 percent of transplant recipients were uninsured"

The paper begins with the following story:
"In September of 2005, one of us (Herring), then a third-year medical student, cared for a previously healthy 25-year-old uninsured day laborer who arrived at the emergency department with rapidly advancing idiopathic dilated cardiomyopathy. The patient was ultimately deemed unsuitable for cardiac transplantation.
The decision on transplantation was driven, in part, by realistic concern about the patient’s inability to pay for long-term immunosuppressive therapy and to support himself during recovery. Absent such resources, the likelihood of a successful outcome is compromised (1–4). The clinicians caring for him faced a wrenching dilemma: deny the patient a transplant, or use a scarce organ for a patient with a reduced chance of success. He died of heart failure two weeks after his initial presentation. This tragedy inspired us to examine data on the participation of the uninsured in organ transplantation, both as recipients and as donors."

HT Scott Kominers

Matching students to high schools in NYC

The final version of our paper on the design of the NYC high school match is now available: Abdulkadiroglu, Atila , Parag A. Pathak, and Alvin E. Roth, "Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match,'' revised, November, 2008, American Economic Review, forthcoming.

This paper had a long evolution, partly because of the actual work it represents, and partly because of the lengthy and interesting process of figuring out and negotiating (among coauthors and with editors and referees) how to write a paper that properly represents the mix of theory, institutional detail, and empirical work that is integral to practical market design.

Incentives for kidneys

Kidney Disease Takes a Growing Toll reports the Times, as a result of diabetes and hypertension. The article touches on the debate about compensation for donors.

Writing of the National Kidney foundation the article says
"The organization has also been criticized by advocates who support financial compensation for organ donors, which the foundation firmly opposes as unethical and unlikely to increase the availability of organs. (In contrast, the American Association of Kidney Patients supports research into how financial incentives would affect organ donation.)"

Receivables exchange

The NY Times reports on a new online market in which companies can sell their receivables: An Online Market for Selling I.O.U.’s

"Businesses getting pinched by the credit squeeze can now tap a new source of cash — by selling the money owed to them by other companies.
A new online marketplace, the Receivables Exchange, was formally introduced on Monday after 18 months in development. It allows companies to sell their outstanding receivables at a discount to a panoply of financial institutions."

Truth in advertising: I'm on their advisory board.

Market for health care: adding choice in Britain

Choice is having an effect on Britain's National Health Service, the Telegraph reports:
NHS hospital units shunned by patients face closure
NHS hospitals units are facing closure as patients choose to be treated in more successful medical centres, new figures show.

"Patients are now able to choose where they are treated, with many snubbing the traditional visit to their local hospital and opting for units with the best treatment records, facilities and, crucially, cleanliness and infection control.
GPs can also choose where to send their patients. Crucially, hospitals no longer receive a guaranteed block grant and are paid according to the number of patients they treat. "

"The internal market reforms were the source of a bitter struggle within the Labour Government. Tony Blair and Alan Milburn, his Health Secretary, fought against union and backbench opposition to force through many of the changes to the way the NHS was run. "

Gay marriage: protests over election setbacks

I think of bans on who can marry whom as being pure cases of repugnant transactions, namely transactions that some people don't want other people to be able to participate in. In the case of gay marriage, we're seeing the beginning of the end of an ancient ban, but it may not come easily.

The NY Times reports that demonstrations have been held in protest over Proposition 8 in California: Across U.S., Big Rallies for Same-Sex Marriage

"In New York, some 4,000 people gathered at City Hall, where speakers repeatedly called same-sex marriage “the greatest civil rights battle of our generation.”"

"The big crowds notwithstanding, it has been a tough month for gay rights. Proposition 8 was just one of three measures on same-sex marriage passed on Nov. 4, with constitutional bans also being approved in Arizona and Florida. In Arkansas, voters passed a measure aimed at barring gay men and lesbians from adopting children. "

"The protests over Proposition 8 also come even as same-sex marriages began Wednesday in Connecticut, which joined Massachusetts as the only states allowing such ceremonies. By contrast, 30 states have constitutional bans on such unions. "

Organized crime in Japan

The market for crime is organized differently in Japan. The NY Times reports on a local lawsuit involving the headquarters of a yakuza headquarters: Neighborhood in Japan Sues in Bid to Oust Mafia

"The Dojinkai is one of the country’s 22 crime syndicates, employing some 85,000 members and recognized by the government.
Traditionally, the yakuza have run protection rackets, as well as gambling, sex and other businesses that the authorities believed were a necessary part of any society. By letting the yakuza operate relatively freely, the authorities were able to keep an extremely close watch on them."

British organ donation: opt in versus opt out

The Telegraph reports that A report into organ donation ordered by Gordon Brown will not recommend a system of presumed consent.

"The group ordered to look into the system as a possible solution to a shortage of donors is due to report at the start of next week. It will recommend that ministers work to increase the number of donors but is expected to favour a situation where donors still register to donate organs after their death.
The group is understood to have come under pressure from Muslim organisations to keep the opt-in system.
But senior government figures, including the Prime Minister and Liam Donaldson, the Chief Medical Officer, are understood to believe that presumed consent is the only way to solve the problem. "

The London Times also covers the story, with a different emphasis: Brown’s organ donor plan is rejected by scientists

"Mr Brown has argued previously that presumed consent, already used in Spain and other countries, could help to “close the aching gap between the potential benefits of transplant surgery in the UK and the limits imposed by our current system of consent”. ...
But the taskforce, an expert working group of healthcare professionals, lawyers and ethicists set up to look at ways to increase the number of organ donations, is understood to believe that an opt-out system would do little to boost the number of life-saving transplants. It is expected to say such a move would create practical problems for the NHS and risk a potential backlash among the public.
Last night a senior Whitehall source told The Times: “It’s fair to say this report is not helpful to the case for a change in the law to presumed consent.” "

Thaler and Sunstein will be disappointed too.

Update: Thaler emails me as follows
"Thaler and Sunstein will NOT be disappointed. We favor mandated choice for two reasons. First, presumed consent raises hackles. Second, it leads to more overrides by family since the donor's intentions may be only implicit.
Illinois has adopted this with zero fanfare. When you renew your license they just ask you "donor or not donor". Perfect."

Repugnant transactions in Inauguration tickets

eBay to Ban Resale of Inaugural Tickets

"eBay Inc. is banning the sale of coveted free tickets to the swearing-in of President-elect Barack Obama after a U.S. senator said she was crafting a bill to make such online sales a federal crime.
Representatives of the online auction site met with the Joint Congressional Committee on Inaugural Ceremonies this week and came to a mutual decision on the prohibition, said Nichola Sharpe, a spokeswoman for eBay.
“The tickets are free. We felt that it is an official event,” Sharpe said in an interview today. “We think it’s in the best interest of all concerned.”
Sen. Dianne Feinstein (D-Calif.), chairman of the committee, announced Monday that she was contacting sites, like eBay and Craigslist, to ask them to stop selling the tickets to the Jan. 20 event. She also said she was drafting legislation to criminalize the sales. "

Market for lawyers

A NY Times article reports that the recession is causing some law firms to contract: Law Firms Feel Strain of Layoffs and Cutbacks .

It contains two insights into the market that struck me:

"Lawyer departures, whether voluntary or through layoffs, pose special risks to firms. Layoffs scare off law school recruits, who crave security and wealth. "

“Clients often don’t want to invest in discretionary litigation in a downturn,” Mr. Younger said. Responding to government investigations has been keeping lawyers busy but does not generate continuing work for armies of associates, like a big lawsuit does, he said. “There are tons of government investigations going on now.”

Treasury abandons plans for reverse auction to purchase troubled assets

The Treasury announced today what had already become clear, which is that it has abandoned the initial plan to purchase troubled assets, in favor of buying equity in troubled companies: Remarks by Secretary Henry M. Paulson, Jr. on Financial Rescue Package and Economic Update

"As credit markets froze in mid-September, the Administration asked Congress for broad tools and flexibility to rescue the financial system. We asked for $700 billion to purchase troubled assets from financial institutions. At the time, we believed that would be the most effective means of getting credit flowing again.
During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets – our initial focus – would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks. "

HT to Eric Budish (a market designer on the market)

Market for medical services: time of day

Timing is an important part of many markets: Beth Israel Medical Center in NYC is experimenting with a 24 hour a day clinic for non-emergency services, intended to serve parts of the market that have trouble making appointments during standard doctors' hours: When You Just Have to Get a Flu Shot... at 3 A.M.

Market for spam

The BBC, reporting on the work of Stefan Savage, director of UCSD's Collaborative Center for Internet Epidemiology and Defenses, says that the number of sales generated by spam are surprisingly small, so that spam networks might be vulnerable to measures that would increase their costs even slightly: Study shows how spammers cash in

Savage's study involved sending his own spam, he must have had an interesting conversation with UCSD's Institutional Review Board (i.e. human subjects committee...)

College admissions, international

Harvard's director of admissions visits China: Colleges scour China for top students

"There are no quotas, no limits on the number of Chinese students we might take," Fitzsimmons told a standing-room-only crowd of more than 300 students during a visit to Beijing No. 4 High School. "We know there are very good students from China not applying now. I hope to get them into the pool to compete."

Market for check cashing and payday loans

The NY Times has a nuanced article about the business and recent sale of a big check cashing chain: Check Cashers, Redeemed

"Selling to the poor is a tricky business. Poor people pay more for just about everything, from fresh groceries to banking; Prahalad, the economist, calls it the “poverty penalty.” They pay more for all kinds of reasons, but maybe most of all because mainstream firms decline to compete for their business. Nix has served customers that traditional financial institutions neglected, but he has also profited from that neglect. Whether he profited too much, charging poor communities what the market would bear — that’s a moral question as much as an economic one. And there’s no simple answer. "

Academic marketplace

Tough Times Strain Colleges Rich and Poor
"“Budget cuts mean that campuses won’t be able to fill faculty vacancies, that the student-faculty ratio rises, that students have lecturers instead of tenured professors,” said Mark G. Yudof, president of the California system. “Higher education is very labor intensive. We may be getting to the point where there will have to be some basic change in the model.” "

In the meantime, there's concern that the credit crisis will reduce the availability of student loans:
U.S. Buying More Loans to Students
"While students are still able to obtain federally backed loans, the credit crisis has hurt the lenders that provide them. Dozens have stopped offering the loans, blaming market conditions.
The initiative by the Education Department is intended to make it easier for these loan companies to obtain financing. In the 2009-10 academic year, the agency will purchase loans, as it has this year. The agency will also pledge to be the buyer of last resort for loans purchased by a private intermediary in an effort to foster investment in the student loan industry."

Pope Benedict speaks about organ transplantation

Pope condemns organ transplant abuses as ‘abominable’, the Catholic News Agency reports. (stale link is updated at bottom of post)

 The Pope spoke to a conference at the Pontifical Academy for Life. "Pope Benedict began his address to the conference entitled, “A Gift for Life. Considerations on Organ Donation.” by applauding the great advances of medical science in the realm of issue and organ transplants. Though these measures give hope to people who are suffering, he lamented the problem of a limited availability of organs, as evidenced “in the long waiting lists of many sick people whose only hopes of survival are linked to a minimal supply which in no way corresponds to effective need." Despite the fact that the supply of organs is limited, the Pontiff emphasized that people can only donate, “if the health and identity of the individual are never put at serious risk, and always for morally-valid and proportional reasons. Any logic of buying and selling of organs, or the adoption of discriminatory or utilitarian criteria ... is morally unacceptable,” he stressed. " "The Pope went on to address abuses in the transplant plant of organs and tissues such as organ trafficking, which often affect innocent people such as children. These abuses, he said, “must find the scientific and medical community united in a joint refusal. These are unacceptable practices which must be condemned as abominable.”

*********

Update of stale links (June 2022)

NOVEMBER 7, 2008  UPDATED 14 YEARS AGO

Pope slams human organ trade, warns on transplants

Animal organs for human transplants

The Times of London reports on hopes of
Pig organs ‘available to patients in a decade’

If the formidable immunilogical barriers to such xenotransplants can be overcome, it would be a welcome development that could overcome the present dire shortage of transplantable organs. I'd be happy to see kidney exchange replaced by even better alternatives.

Pig kidneys for transplantation would presumably be sold without becoming a repugnant transaction of the kind that selling human kidneys is widely seen to be. However the breeding of transgenic pigs involves some of the same perception of repugnance:

"Professor Winston said that “organs that might be transplantable” could be ready “within two to three years” and on the basis that research went smoothly they would be fully licensed and tested in as little as ten years. He expected the first “proof of principle” pigs to be bred next year.
Two months ago he hit out at the “red tape” blocking the project’s progress in Britain. Under UK and EU rules, his team has been banned from mating and producing offspring from the transgenic pigs. Research in developing transgenic pigs is now likely to move to the US where the regulatory system is more relaxed. "

Market for professors

A report from Boston College's Center for International Higher Education says that Saudi Arabia has the highest academic salaries, and China the lowest. (I suspect that this may not reflect the qualities of the universities that will emerge in those two very different places...)

Gay marriage: one step forward, 3 steps back

Election day was a good day for studying repugnant transactions, that is, transactions that some people want to engage in, but others don't want them to be able to:
Bans in 3 States on Gay Marriage

In Massachusetts, a referendum banned greyhound racing.

In other referenda relating to repugnant transactions, Colorado and South Dakota voters rejected bills banning most abortions, Arkansas voted to prohibit unmarried couples from adopting children, Massachusetts voters decriminalized possession (but not sale) of less than 1 ounce of marijuana, Michigan legalized marijuana for medical uses, voters in the State of Washington legalized physician-assisted suicide for terminally ill patients, and San Franciscans defeated a proposition that would have prevented police from enforcing laws against prostitution.

School choice in England

School choice in England is in disarray: schools aren't supposed to be able to use their own preferences to select students, and this is a hard rule to enforce, the Telegraph reports:

Admissions chaos as thousands of schools flout rules
Schools face tighter admissions rules after thousands were found to be flouting guidelines designed to stop middle-class pupils dominating places.

Telephone call pricing between telephone companies

Ever wonder how payments are regulated/arranged between phone companies when you call someone who is a customer of a different company?
FCC Scraps Vote on Controversial Phone-Rate Plan

"Mr. Martin had proposed to lower the rates phone carriers pay each other to transfer calls to almost nothing and allow companies that would lose money from the change to raise their monthly subscriber rates by as much as $1.50 for residential phone lines. Business increases would have gone as high as $2.50 per month.
The current phone-exchange payment system, which dates back to the breakup of the Bell system in 1984, is widely divergent, with some carriers charging a fraction of a penny per minute for outside calls to their customers and others charging hundreds of times that much for the same service.
The FCC has for years tried to reform the payment system, but policy makers and industry sectors can't agree on a solution."

The market for science

The "republic of science" is the original open source public good, and its origins are traced to Renaissance patronage of science and math, in Paul David's essay in Capitalism and Society, The Historical Origins of 'Open Science': An Essay on Patronage, Reputation and Common Agency Contracting in the Scientific Revolution

The essay is accompanied by a comment by Ken Arrow, who summarizes the issue as follows:
" Scientific activity, like any other, requires resources, in the first instance: human resources usually with considerable alternative value, but also material
resources of an increasingly expensive nature. The typical dissemination of scientific information does not, in general, yield any income; indeed, publication itself is costly and was more so before the invention of printing.
"David concentrates in this paper on the development of scientific activity from the 15th to the 17th centuries, a period clearly of the greatest importance in setting the tone and style of the modern Scientific Revolution. His thesis, amply documented, is that the prestige to patrons, generally rulers, was an important motive for the support of science. They were not unaware of the practical usefulness of scientific discovery in technological development, but the sheer display value was an additional and powerful motive. To achieve this prestige, though, it was necessary to evaluate the qualities of the scientists to be supported. Especially in the case of mathematics, this was beyond the capacity of the rulers or their ministers. An open diffusion of science, then, was needed to permit critical evaluation, as well, indeed, as to display the prestige-granting science. Hence, the gradual emergence of the apparatus and value-system of science: publications, the opportunity for comment and criticism, and, eventually, the emergence of publicly supported academies, such as the Royal Society in England and the Académie des Sciences in France, and of periodicals for the diffusion of ideas."

Incentives for students who get good grades

The Washington Post reports on experimental programs to reward inner city kids when they do well in school: Incentives Can Make Or Break Students: Ethical Issues Come With Gains on Tests
"The inducements range from prepaid cellphones to MP3 players to gift certificates. But most of them are cash: $10 for New York City seventh-graders who complete a periodic test; $50 for Chicago high school freshmen who ace their courses; as much as $110 to Baltimore students for improved scores on the Maryland High School Assessments. "

Some find this repugnant: "Critics denounce the initiatives as bribery and say the money could be better invested in ideas known to work, such as smaller class size. They also point to a body of psychological research suggesting that tangible rewards can erode children's intrinsic motivation. DePaul University education professor Ronald Chennault says there are ethical issues posed by the ventures, most of which are experimental and dependent on private funding and local political support."

Harvard's Roland Fryer is directing some of these experiments. "This is not a silver bullet," he said during a recent visit to the District. "But it's better than sitting around and doing nothing."

Labor Market Intermediation

David Autor has an essay on The Economics of Labour Market Intermediation"

"One might have speculated that in an era of rapid information flows and substantial job mobility, the importance of labour market intermediaries would wane. Indeed, the most prominent labour market intermediary, the traditional labour union, has been in secular declines for decades. Yet, the decline of labour unions is the exception rather than the rule. Two of the intermediaries discussed above – online search engines and centralised medical matches – have only recently gained prominence. And another labour market intermediary not even considered above, temporary help agencies, has risen from relative obscurity to international significance over the last two decades. "

The Federal Reserve’s Term Auction Facility

As the credit crisis unfolded, the Fed prepared to auction funds to banks. Among other design features (such as how expressive a bidding language to allow) they thought about adverse selection: they wanted to reduce the signal value "stigma" of participation.

The Federal Reserve’s Term Auction Facility
July 2008 Volume 14, Number 5
Authors: Olivier Armantier, Sandra Krieger, and James McAndrews

Abstract: "As liquidity conditions in the term funding markets grew increasingly strained in late 2007, the Federal Reserve began making funds available directly to banks through a new tool, the Term Auction Facility (TAF). The TAF provides term funding on a collateralized basis, at interest rates and amounts set by auction. The facility is designed to improve liquidity by making it easier for sound institutions to borrow when the markets are not operating efficiently."

Auction Design: "Once the Federal Reserve concluded that an auction format was an effective funding alternative, it added features aimed at ensuring the most efficient distribution of funds to banks with a high demand. In particular, the Fed established a minimum rate at which bids could be submitted that was set in a comparable, competitive market (rather than a penalty rate, which is set at a premium to existing market rates).This market-based minimum bid rate was likely to encourage participation and reduce any stigma associated with receiving auctioned funds, since banks would not necessarily signal an abnormally high demand by bidding. The Federal Reserve also chose a uniform-price (or single-price) auction rather than a discriminatory (pay-your-bid) auction in part to spur participation further. By using the uniform-price structure common in Treasury auctions, the Fed reasoned that banks would be more comfortable with bidding. Finally, to allow for the widest allocation of funds, the central bank imposed a cap on the bid amount corresponding to 10 percent of the auction size.
The Fed also imposed two important rules. First, based on its experience with option auctions in 1999, it would allow each bidder to make two rate-amount offers. This rule represents the Fed’s resolution of the trade-off associated with multiple rate-amount offers: as the number of offers increases, the auction becomes more complex, but participants are able to make bids that are more representative of their demand. Second, the central bank would require TAF participants to pledge collateral beyond the amount necessary to secure credit in the new facility. This rule was imposed to ensure that bidders in the new facility could still borrow through the discount window’s primary credit facility to meet unexpected overnight funding needs."

Credit Default Swaps: reducing counterparty risk

New York Fed Welcomes Further Industry Commitments on Over-the-Counter Derivatives

"The following areas constitute our central priorities for addressing both operational and market design concerns for OTC derivatives:
Institute a Central Counterparty (CCP) for Credit Default Swaps (CDS)...
Reduce Levels of Outstanding Trades via Portfolio Compression. Market participants continue to reduce the number of outstanding CDS trades through multilateral trade terminations (tear-ups)
Enhance Market Transparency.

HT to PrefBlog

Bank secrecy:

U.S. and Swiss law differ regarding U.S. citizens who keep accounts in Swiss banks that do business in the U.S., and an interesting game is afoot:
IRS, Justice Target Undisclosed Assets In Swiss Accounts

"Over the summer, the IRS won permission from a federal court to demand that UBS turn over the identities of an estimated 19,000 American clients who have failed to disclose their Swiss-based accounts on U.S. tax returns. It remains unclear what has or will come of that effort. Swiss law restricts the bank's ability to breach client confidentiality. Swiss law also gives clients the opportunity to oppose the release of their names through a judicial process that could slow any disclosures. "...

"James Nason, a spokesman for the Swiss Bankers Association, said, "UBS itself cannot decide to hand over client data because then it would be violating Swiss law." Any Swiss bank "waits for instructions from the Swiss authorities," Nason said, adding, "Switzerland doesn't allow fishing expeditions." ...

"Whether or not the Swiss officially give up clients' secrets, the U.S. government could have other ways of getting information. For example, bank employees have an incentive to expose tax evaders to the IRS, Skarlatos said, because whistle-blowers could receive 30 percent of the money they help the government collect. "

Market for toilets: NYC marathon

Providing Toilets for 39,000 Runners

The NYC marathon is a peak load event:
"Gathering and placing 2,250 portable toilets for a one-day event — and then removing them almost immediately — is a daunting task. The marathon represents the third-largest annual assemblage of portable toilets in the country, behind the Rose Bowl college football game and parade and the motorcycle rally in Sturgis, S.D. Placed side by side, the 4-foot-wide toilets would stretch 1.7 miles. "

Apparently portable potties have a natural life cycle:
"The average special-event life of a portable toilet, Malone said, is two years — shorter if it attends a lot of concerts — before it is assigned to duty at construction sites, the “bread and butter” of the business. "

Piracy

The LA Times reports: Somalia's pirate problem grows more rampant

"Entire villages along the coast now engage in piracy. Unemployed youths provide the muscle. Idle fishermen offer boats and knowledge of the coastline. Foreign businessmen provide the money for guns, radios and satellite phones. Islamic hard-liners are lured by the chance to attack Western interests offshore.
The result is a criminal free-for-all. Pirate attacks off the coast of Somalia have tripled over the last three years, with nearly three a week in 2008, maritime officials say. Currently there are about a dozen hijacked ships, with more than 300 crew members, being held hostage. Ransom payments are often as high as $2 million."

Market for marketing professors

Dan Goldstein at LBS has published his impressions of and advice about the interviewing process at the American Marketing Association annual meetings: If you can get through this, you can be a marketing professor, EVERYTHING YOU EVER WANTED TO KNOW ABOUT THE AMA INTERVIEWS (2008 edition)

The Marketing meetings come half a year earlier than the Economics meetings, but they have a family resemblance. (I gather that years ago the Marketing job market meetings happened at the same time as Economics, as part of the ASSA meetings, but that the Marketing market unraveled...)

HT to Katy Milkman (who is on the market this year)

Market for masseurs in S. Korea

SKorean Court Rules in Favor of Blind Masseurs

"A law that allows only visually impaired people to become licensed masseurs does not violate South Korea's constitution, a court ruled Thursday in a victory for the blind.
The decision brings an end to a fierce legal battle over whether the sighted should be allowed to become professional masseurs, a trade that has been reserved for the blind for nearly a century. The debate has sparked fervent protests by the blind, who say massage is their only chance at making a living."

Market for elephant ivory

The Times of London reports on a government sponsored sale of legal elephant ivory (I presume taken from elephants that died a natural death):
Ivory from 10,000 elephants on sale amid fears of new slaughter

"Wildlife groups and other African nations fear that the controversial sell-off could breathe life back into the ivory trade, banned in 1989, and trigger a resurgence of the poaching that devastated Africa’s elephant populations in the 1970s and 1980s.
Julian Newman, campaigns director with the Environmental Investigation Agency, said that the move could once again open the floodgates to poaching, which reduced Africa’s total elephant population from five million in the 1930s to about 600,000 today. “This [auction], coupled with a lack of sufficient checks in importing countries such as China and instability in some African range states, could easily drag us back to the dark and bloody days of the 1980s when we were seeing around 200 elephants killed by poachers each week.” Conservationists argue that a lack of proper oversight will allow poachers to mix illegal and legal ivory and slip it past regulators, many of them corrupt. "

Market for bribes and corrupt influence

A MA state senator has been charged with accepting bribes to influence the issuing of a liquor license. The criminal complaint describes how the transactions are alleged to have been carried out. It turns out to be unwise to take bribes from a cooperating witness.

Blood supply safety--paid versus unpaid

The Food and Drug Administration is responsible for keeping the blood suppy safe. As anyone who gives blood knows, before you can give blood you have to be interviewed about your sexual habits and other potential risk factors. Some donors are turned away, "deferred," based on their answers. (There are recently limits on how much cumulative time overseas a donor can have had, which exclude me.)

Here is a transcript of an FDA conference on Behavior-Based Donor Deferrals in the NAT Era (NAT is nucleic acid testing, i.e. it refers to the non-behavioral ways of screening the blood supply). It has some interesting points, including this on paid versus unpaid donation:

"But looking a little bit more closely at the role that has been played by behavioral exclusion, this is just an example for viral hepatitis. In the 1970s there was concomitant introduction of labeling of paid versus volunteer donation for blood for transfusion, which was at the same time as the first generation of the test for HBsAg, and the combined effect was a very dramatic, approximately 90 percent, reduction. We have never completely teased out how much of this was due solely to the change in labeling which eliminated paid donation, but we do know from the antecedent literature that paid donation was highly associated with transmission of hepatitis."

That is, donors can be paid for blood donation, but paid donations must be labelled as such.

Universities in the current economy

The Chronicle of Higher Education reports: Booming States Lure Academics From Those With Financial Woes (un-gated version here for five days).

Texas, anyone?

Auctions for seats at sporting events

The Jets Gross $16 Million in a Seat-License Auction

The days when sports teams sold tickets at below market clearing prices to fans who waited on long lines are fading fast.

NBER working papers on design of partnerships and auctions

Two new NBER papers touch on market design: Hilt and O'Banion discuss the introduction of limited partnerships, and Bajari and Yeo look at how changes in the rules of FCC spectrum auctions changed bidding behavior.


The Limited Partnership in New York, 1822-1853: Partnerships without Kinship
by Eric Hilt, Katharine E. O'Banion - #14412 (DAE LE)

Abstract:

In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their
effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.
http://papers.nber.org/papers/W14412


Auction Design and Tacit Collusion in FCC Spectrum Auctions by Patrick Bajari, Jungwon Yeo - #14441 (IO)

Abstract:

The Federal Communications Commission (FCC) has used auctions to award spectrum since 1994. During this time period, the FCC has experimented with a variety of auctions rules including click box bidding and anonymous bidding. These rule changes make the actions of bidders less visible during the auction and also limit the set of bids which can be submitted by a bidder during a particular round. Economic theory suggests that tacit collusion may be more difficult as a result. We examine this proposition using data from 4 auctions: the PCS C Block, Auction 35, the Advanced Wireless Service auction and the 700 Mhz auction. We examine the frequency of jump bids, retaliatory bids and straightforward bids across these auctions. While this simple descriptive exercise has a number of limitations, the data suggests that these rule changes did limit firms' ability to tacitly collude.
http://papers.nber.org/papers/W14441

Slavery

Court Finds Niger Guilty on Slavery Charge

"A West African regional court found the government of Niger guilty on Monday of failing to protect a young woman who was sold into slavery at the age of 12. ...
"Slavery is outlawed in Niger and the rest of Africa, but it persists in pockets of Niger, Mali and Mauritania. Ms. Mani’s experience was typical of the practice. Her impoverished family sold her to a farmer named Souleymane Naroua when she was 12 for about $500."

Business networking thrives in a recession

Business networking is countercyclical: the Financial Times reports
"Professional networks such as LinkedIn and Xing, a European rival, have surged in popularity amid the economic crisis, as people look for advice and jobs from their online contacts."

"Online recruitment sites, such as Monster, Careerbuilder and Yahoo’s HotJobs, saw visitors leap 42 per cent in the same period.
“Financial services is one of our fastest-growing sectors,” said Mr Nye, with activity – frequency and duration of visits – up 50 per cent in August and September.
“Clearly people are joining as they are thinking about their employment situation. People are also getting advice from their network, reference-checking vendors or searching for candidates to fill positions.”
Xing now hosts a 2,000-strong group for “Lehman Brothers Alumni”.
Lars Hinrichs, chairman and chief executive of Xing, said: “We see the crisis as very beneficial for business networks because you are spending more time on your career than on luxuries.”

Property rights

A lack of well defined property rights can hamper efficiency. A case in point: Christians Feud Over Church of Holy Sepulcher

"The Israeli government has long wanted to build a fire exit in the church, which regularly fills with thousands of pilgrims and has only one main door, but the plan is on hold because the sects cannot agree where the exit will be built. In another example, a ladder placed on a ledge over the entrance sometime in the 19th century has remained there ever since because of a dispute over who has the authority to take it down."

Animal rights and food production in CA--Proposition 2

Animal rights, and what kinds of food can be sold, continue to be an issue in California (and not just in connection with the 1998 referendum banning the sale of horse meat). Here are two stories about Proposition 2, on this year's ballot:
A California Ballot Measure Offers Rights for Farm Animals , and
The Barnyard Strategist

"Proposition 2, co-sponsored by the Humane Society and Farm Sanctuary, the biggest farm-animal-rights group in the United States, focuses on what are considered the worst animal-confinement systems in factory farms. The ballot initiative, which voters will decide on Nov. 4, requires that by 2015 farm animals be able to stand up, lie down, turn around and fully extend their limbs. In effect that translates into a ban on the two-foot-wide crates that tightly confine pregnant pigs and calves raised for veal — a space so small that they can’t turn around. And it would eliminate so-called battery cages where four or more hens share a space about the size of a file drawer."

Some years ago, New Zealand's Animal Welfare Act of 1999 gave considerable deference to the rights of "Non-Human Hominids," such as chimps and other 'great apes'. I recall Ted Bergstrom remarking at the time that there weren't many chimps in New Zealand, and that New Zealanders could have made more of a statement by giving rights to sheep. It looks like Californians are going to have an option like that at the polls next week.

Market for coffee

I wonder what a recession will do to high end coffee shops. Will Americans back away from $4.00 cappuchinos? Or will those seem like a still-affordable luxury--just as luxurious (in their own way) as a Rolls Royce, but cheaper... The NY Times reports on high end coffee shops in NYC: Bean Town

Assisted suicide and "death tourism"

The Times of London follows the Swiss suicide ‘clinic’ Dignitas

"The Crown Prosecution Service is deciding whether to press charges against the parents of Daniel James after it learnt that they had accompanied him to Dignitas, where he ended his life last month. The case has provoked sympathy and condemnation in almost equal measure because, unlike most previous cases, Mr James was not terminally ill. ..."

"Switzerland allows assisted suicide by a nondoctor provided that it is not done for profit. That is the most liberal ruling in Europe and its principles were set out as early as 1918: “In modern penal law suicide is not a crime . . . aiding and abetting suicide can themselves be inspired by altruistic motives.”Even critics of Dignitas such as Andreas Brunner, the state prosecutor in Zurich, accept the principle. “But there should be tighter controls, regulating the quality of the help offered,” Mr Brunner argued. “And more transparency when it comes to individual cases, to finances and to the organisation itself.”The real concern is not the practice of helping people to die – one Swiss organisation, Exit, has helped more than 700 Swiss citizens and has escaped most political criticism – but the tarnished image that comes with being seen as the suicide capital of Europe. Opponents call it “death tourism”."

An accompanying story explains Why I prescribe drugs for suicide, by Dignitas doctor

Britain's National Health Service and private medicine

Up until now, Britain's NHS has insisted that patients either accept the NHS's formulary which does not cover some expensive drugs, or give up all access to NHS care; i.e. patients who pay for some of their own drugs have been required to pay for all of their drugs and treatment, even those that would have been free to other British citizens. Now, the Telegraph reports:
"NHS patients will be allowed to pay for private 'top up' care: Patients will be allowed to pay privately for drugs and still receive NHS treatment under plans to be announced by the Government in the next fortnight. "

"Under current rules, hospitals may withdraw treatment from patients who want to use their own money to buy drugs not available on the health service.
But Alan Johnson, the Health Secretary, is preparing to announce that so-called top-up payments will be allowed. "
...
"Concerns have been raised that such a move would create a two-tier health service where wealthy patients buy life saving treatments denied to those who cannot afford them.
...The Government ordered a review into top-up payments earlier in the year. There has been a public outcry after some NHS hospitals refused to treat those paying for their own drugs or other treatments."

Freakonomics on legalizing prostitution

Should Prostitution Be Decriminalized?, a thoughtful post on the subject at Freakonomics.

eBay hasn't replaced garage sales

The credit crunch is bringing them back: Garage Sales on Rise With Economic Downturn

Debt and fairness

Margaret Atwood points out that credit and debt are not only economically important but highly emotive, and that solutions to the credit crisis will also involve deeply held beliefs about fairness:
A Matter of Life and Debt

Not so many centuries ago, debt transactions were considered repugnant in many parts of the world (and are still so considered in parts of the Islamic world).

Kidney Exchange on Grey's Anatomy

Kidney exchange makes it into fiction on the Oct.23 episode of Grey's Anatomy, even more complicated than in real life (or at least complicated in different ways).

"Miranda pulls all the surgical residents and interns for a "domino surgery," -- 12 kidney transplants in six O.R.s at the same time. "This whole surgery is a giant house of cards. If we lose one donor, we lose them all," Miranda advises the team. Complications arise with one young man whose estranged father is paying him $10,000 to donate his kidney. Izzie complains to Miranda, but they all agree to turn a blind eye so that the surgery -- which is making national news -- can go on. The surgeries are canceled when a female donor learns that her husband's donor is also his lover of three years and decides not to donate her kidney. Miranda reminds her that five other peoples' lives are on the line as well and the woman agrees to go ahead with the surgery. "
{I'm guessing they mean 6 transplants in 12 O.R.s, 6 for the nephrectomies and 6 for the transplants, but I didn't see the show...A.R.}

HT to Greg Barron

Housemate match

A matching service run by the Atlanta JCC: Housemate Match

"Housemate Match (HMM) is a unique, nationally recognized, home sharing program that matches mature adult homeowners who have extra room in their homes with adults (tenants) seeking a roommate in a beautiful and safe place to live in the Atlanta area.
HMM provides rooms to rent for those who prefer to share a home rather than living alone and for those who choose to remain in their home and age in place.
International friends are welcome. "

Pawn shops--high interest loans for the credit challenged

The Telegraph reports on the credit crisis in England: Financial crisis: hard-up consumers are selling jewellery for cash

Pawnbrokers make loans with goods as collateral, and mostly items are redeemed.

"Pawnbrokers are distinct from high street buy-back shops such as Cash Converters, where a customer will sell an item with the option to buy it back 28 days later. If the customer doesn't repurchase the item, it goes into the shop to be sold (items are not usually limited to gold and jewellery; they can be electrical goods, for example).
Pawnbrokers are regulated alongside banks and other lenders by the Consumer Credit Act 1974. Borrowing through a pawnbroker may not be suitable for everyone and high interest rates mean it is not a long-term solution, as they themselves acknowledge, but sometimes it can resolve short-term cash flow problems. "

Congestion in the supply chain for new doctors

A new doctor needs not only a place in medical school, but also some clinical rotations in hospitals while still a medical student, and a residency position after graduation. New medical schools, and medical schools that wish to increase their class size, need to find these for their students, which is one of the constraints on increasing the size of US medical school output. The Chronicle of Higher Education describes the situation in Arizona: Shortage of Training Slots Threatens to Stall Influx of New Doctors. (An ungated version will be available for five days at http://chronicle.com/temp/email2.php?id=hVntG8hqVPcppSXRz6qmdkfdQtSZNB5V )

Britain votes to allow human-animal hybrids

On the repugnant transaction front, the Telegraph reports that after considerable debate, MPs vote to allow human-animal hybrids

"Following a landmark Commons vote, Britain will become one of a handful of countries in the world to encourage ground-breaking research by implanting human cells into an egg taken from an animal, usually a rabbit.
Pro-life MPs warned that the step could lead to the creation of half-human, half-ape "humanzees" or "minotaurs" - a claim denied by the Department of Health.
Hybrids - called "admixed embryos" by the scientific community - are banned in at least 21 countries, but scientists believe that they could be used to find cures for dozens of serious conditions, from heart disease to dementia.
MPs voted overwhelmingly in favour of the Human Fertilisation and Embryology Bill after being told that it could revolutionise the lives of hundreds of thousands of people, bringing to a close one of the most bitter Parliamentary wrangles of recent years. "

Emergency Economic Stabilization Act of 2008 --market mechanisms

The bailout bill is pretty terse on the details of market design: here's the relevant section of H.R.1424, part b,SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS

"(b) Use of Market Mechanisms- In making purchases under this Act , the Secretary shall--
(1) make such purchases at the lowest price that the Secretary determines to be consistent with the purposes of this Act ; and
(2) maximize the efficiency of the use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate.
(c) Direct Purchases- If the Secretary determines that use of a market mechanism under subsection (b) is not feasible or appropriate, and the purposes of the Act are best met through direct purchases from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid for assets are reasonable and reflect the underlying value of the asset."

HT to Guhan Subramanian

Market for books in translation

The Frankfurt book fair sounds like it's a lot of fun for publishing professionals, but it also sounds like the market for books to translate hasn't been changed much by technology: Wheeling and Dealing and Finding Books to Translate Into Dutch. Much of the information seems to be passed between people who know each other.

Market for Ivory

Ebay to Ban Sales of Ivory Products in January

There are lots of reasons that transactions can become repugnant: "EBay is banning the sale of ivory products to help protect African and Asian elephants."

''EBay's decision to wash its hands of the uncontrollable, bloody ivory trade is commendable and should set an example for others,'' said Teresa Telecky, policy director for Humane Society International.

Academic job market during a recession

The Chronicle of Higher Ed informally surveys supply and demand across academic disciplines: Job Market: Optimism, Tempered by Worries--Prospects for Ph.D.'s in some fields are decent, despite economic woes
(ungated version here for five days: http://chronicle.com/temp/email2.php?id=28qCgnMR5vznkhvXJdjPyXrMks4NssKk)

In a recession following a stock market decline, more professors may delay retirement, state universities may freeze hiring, non-academic hiring may slow down, all of which could potentially affect academic hiring, both by changing demand and by changing the nature of demand (e.g. changing the mix of tenure track versus other positions).

Market for drugs in Naples

The Times of London writes of the drug market in Naples, where market norms are breaking down.

Apparently the proverbial honor among thieves has its limits:
"The viciousness appalled even high-ranking crime bosses. Targeting innocent relatives of clan members is supposedly against the unwritten rules of Italy’s mafias. The Camorra syndicates of the area, however, had little time for niceties when they saw their status as rulers of Europe’s single biggest drugs market threatened. "

One of the bosses reflects "“There is a big difference between now and then, between my generation and the one coming of age now,” he says, drawing heavily on a cigarette. “There is too much money at stake. As a result there are no more values, no more rules or principles. Before, people kept their word and answered for their actions. We called them men of consequence. But now everyone wants to become a boss. Any young punk wants to have power, wants to be someone. They make a mess of things and don’t want to carry responsibility. "

Black market in poverty--fraudulent ration cards

The Hindu reports: Hi-tech foodgrains rationing system introduced for below poverty line families

"Bangalore: The State Government has introduced a hi-tech rationing system which will ensure the timely supply of foodgrains to people living below the poverty line and simultaneously prevent black-marketing and circulation of bogus ration cards. ...
"Governments in the State over the past three decades have found it difficult to check the rampant black-marketing in foodgrains and circulation of bogus ration cards, although it is evident that politicians have been behind the large-scale issue of below poverty line cards in exchange for votes. "

Assisted suicide in England, continued

The recent case of an Englishman whose family travelled with him to Switzerland to end his life has led to renewed debate on English laws against assisted suicide. The Telegraph quotes the British philosopher Mary (Baroness) Warnock:
""We have a moral obligation to other people to take their seriously reached decisions with regard to their own lives equally seriously," she said.
Her comments came after Mr James' parents were questioned by West Mercia Police after travelling with him to Switzerland. "

The spot market for manual labor

Market for Day Laborers Sours With the Economy

"As the economy has worsened, the number of laborers gathering at the Home Depot here has grown, making the competition for fewer jobs that much fiercer. The newcomers have arrived from other cities, thinking things would be better in New York. Or they have been laid off from semipermanent jobs in manufacturing and construction, either as a result of the economy or tougher crackdowns on illegal immigrants. "

Incremental changes

It is often easier to make incremental changes in a marketplace, rather than big ones all at once. The NY Times has a story on Yahoo's painstaking process of changing its home page, a process apparently common to big web portals: Changing That Home Page? Take Baby Steps.

"You could call it stealth innovation. The company’s goal is to end up several months from now with a completely different, and presumably better, front page — with its audience intact. The effort is as much art as science and seeks to balance the company’s desire to innovate with its fear of alienating users. And it offers an example of how online services are designed and improved in a world where a rival’s offering is just a click away.
The challenges are not unique to Yahoo. All kinds of Web sites, big and small, face similar issues as they leap from version 1.0 to version 2.0 and beyond. But the largest, most successful sites have the most to lose by springing sudden changes on their users, so they often exercise particular caution. Google, for instance, has said it tries to make changes to its search engine that, on their own, are imperceptible, but that taken together result in a better product over time. With the same goal in mind, eBay once took 30 days to gradually change the background color of its home page from gray to white. "

Financial Fraud, and law enforcement

Some parts of market design involve criminal law, and these depend for their effectiveness on law enforcement. The NY Times reports that the
F.B.I. Struggles to Handle Wave of Financial Fraud Cases

"The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime...
"So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars."

Incentives in (British) medicine, continued

Doctors paid thousands not to send patients to hospital for treatment

The Telegraph reports "Family doctors are being paid thousands of pounds not to send their patients to hospital for specialist treatment, sparking fears over standards of care.
...Dozens of incentive schemes have been uncovered which allow GPs to profit by slashing the number of patients they refer for hospital care.
Under one scheme, GPs stand to gain £59 for every patient not referred to hospital, if they cut an average referral rate by between two and eight per cent. "

Recall my earlier post on a different but related issue.

More on Darkmarket, the Craigslist of Crime

It was always the case that if you wanted to strike up a conversation with an undercover policeman, you could walk into a bar and whisper that you were looking to hire a hitman. It turns out that this is true in cyberspace as well: Cybercrime Supersite 'DarkMarket' Was FBI Sting, Documents Confirm

"Like earlier crime sites, DarkMarket allowed buyers and sellers of stolen identities and credit card data to meet and do business in an entrepreneurial, peer-reviewed environment. Products for sale ran the gamut from specialized hardware, to electronic banking logins collected from phishing attacks, stolen personal data needed to assume a consumer's identity ("full infos") and credit card magstripe swipes ("dumps), which are used to produce counterfeit cards. Vendors were encouraged to submit their goods for review before offering them for sale.
...the FBI used DarkMarket to build "intelligence briefs" on its members, complete with their internet IP addresses and details of their activities on the site. In at least some cases, the bureau matched the information with transaction records provided by the electronic currency service E-Gold."

In any event, the FBI went out in character. You can read the final closedown message here: 56 Arrested in DarkMarket Sting, Says FBI

HT to Steve Leider (who is on the market this year)

DarkMarket

The London Times reports: Online crime marketplace DarkMarket closed following UK police raids

"DarkMarket was used to swap information about fraud techniques and to sell credit card details. In December, The Times revealed that websites such as DarkMarket were selling financial details of tens of thousands of Britons for less than £1. "

Assisted suicide: Switzerland and England

The London Times reports that prosecutors are looking into the case of a British citizen whose family helped him travel to a Swiss clinic to die: 'Second-class life' not enough for injured rugby star Daniel James

"More than 100 Britons are claimed to have travelled to Swiss clinic where Daniel died to make use of laws that allow assisted suicide. Most are in the final stages of a terminal illness.
Although assisted suicide is illegal in Britain and carries a sentence of up to 14 years in jail no one has been prosecuted for taking someone to Dignitas. The figure on assisted dying, was released by the clinic at the start of a High Court test challenge to the laws that ban aiding and abetting suicide. "

Black market for body parts

Former UCLA Exec Pleads Guilty to Body Trafficking

"The former chief of UCLA's cadaver program pleaded guilty Friday for his role in selling donated body parts to medical, drug and research companies in a scheme that netted up to $1 million, prosecutors said.
Henry Reid, 58, pleaded guilty in Los Angeles County Superior Court to one count of conspiracy to commit grand theft, with a special allegation that he damaged or destroyed more than $1 million worth of school property, which refers to the donated bodies."

New survey of matching by Sonmez and Unver

Allocation and Exchange of Discrete Resources: Matching Market Design for House Allocation, Kidney Exchange, and School Choice by Tayfun Sonmez and Utku Unver, forthcoming in the Handbook of Social Economics edited by Jess Benhabib, Alberto Bisin, and Matthew Jackson.

Arrow in the Guardian on the financial crisis

Economists are accustomed to think of markets as being public goods, but Ken Arrow writes that they may have negative externalities if they increase asymmetric information, and generally make reliable understanding harder to come by:

"the root is this conflict between the genuine social value of increased variety and spread of risk-bearing securities and the limits imposed by the growing difficulty of understanding the underlying risks imposed by growing complexity."

Experiments in market design: financial bailout

NPR has followed up their earlier coverage of the Ausubel-Cramton reverse auction proposal with a brief story reporting on some experiments they are running with it: Can the Banks Cheat?

Hat tip to Steve Leider (an innovative experimenter and behavioral economist on the market this year:)

Market design that you can't refuse: Treasury switches to equity

The NY Times reports that the latest change of direction in the financial bailout was presented as an ultimatum by the Treasury to big banks: Drama Behind a $250 Billion Banking Deal

Peer to peer lending in the credit crunch

Alan Krueger, writing in the NY Times blog, notes that even borrowers with good credit are being moved by circumstance to some of the peer to peer lenders: In Credit Crisis, Some Turn to Online Peers for Cash

Congestion fees: "Lexus lanes" considered in UK

The Telegraph reports that British traffic authorities are considering allowing motorists driving alone to pay to be allowed to drive in less crowded lanes previously reserved for high occupancy vehicles: 'Lexus lanes' could be trialled within two years .

The automobile association finds this repugnant:

"The plans were condemned by the AA.
"Our members oppose them, they don't want to pay to use hot lanes," a spokesman said. "Why should people have to fork out to avoid congestion?" "

Tipping--in restaurants

The NY Times reports on the history of how that aristocratic European institution became an American custom: Why Tip?
It was once widely regarded as a repugnant transaction:
"Ultimately, even those who in principle opposed the practice found themselves unable to stiff their servers. Samuel Gompers, who was president of the American Federation of Labor and a leading figure of the anti-tipping movement, admitted that he “followed the usual custom of giving tips.” "
Ben Franklin worried about it: "“To overtip is to appear an ass: to undertip is to appear an even greater ass,” Benjamin Franklin reportedly noted during his stint in Paris, and his quandary continues to vex American diners."

But eventually the custom caught on in America even as it waned it Europe.

Kol Nidre: Contract law when your counterparty is omnipotent

Michael Weiss recounts in Slate how the Kol Nidre prayer , has changed over time.

Happy Hour

This story, from the Times of London, seems to combine at least two themes commonly encountered in legislation limiting repugnant transactions: Ministers to ban free drinks for women

Consumer goods in Gaza

Ynet reports on the tunnel economy.

E-retailing

The NY Times reviews some of the history of eBay and Amazon: Amid the Gloom, an E-Commerce War

Marriage Market--gay marriage legalized in CT

Conn. High Court Rules Gay Couples Can Marry

We are witnessing a transaction widely regarded as repugnant since Biblical antiquity being reassessed in light of modern ideas about equal protection under the law.

Market for economic advice (market failure)

This morning Peter Cramton and Larry Ausubel were on NPR talking about their reverse auction proposal, and The Chronicle of Higher Education writes about how little advice Congress got from economists on the financial rescue plans (i.e. not only how but what to buy, etc):
In Dismal Times, Economists Try to Shape Financial Debates (a permanent link for subscribers here)

Some quotes:
"Legislation drafted in haste and negotiated with recalcitrant partners is going to be bad legislation"

"Despite his frustrations with Congress, Mr. Galbraith says that he learned from watching his father for many years that it is important never to condescend to policy makers. “These are serious people, and you need to speak to them in a candid and serious way,” he says. “The question is not so much what economists need to say to policy makers, but what kind of policy education economists need in order to be able to intelligently understand the constraints that policy makers operate under.”
But one of the professors who joined Mr. Zingales in writing the anti-bailout petition takes a dimmer view of economists' efforts to speak directly into lawmakers' ears.
“The business of advice remains what it was,” says John H. Cochrane, a professor of finance at the University of Chicago. “You have to be willing become a sort of media person. You have to tailor your advice to what people want to hear, and then shade it a bit in the direction of common sense.” "

Online advertising--Ben Edelman

Securing Online Advertising: Rustlers and Sheriffs in the New Wild West

There's a lot of fraud in online advertising, in all the directions you can think of and some you probably haven't. Here's the paper.


I nominate Ben Edelman for Sheriff.

Electric Car Stations in Hawaii

How can you enact a move from a gas station based fueling grid to an electric charging station based grid? Easy - start on an island. Behind this effort is Better Place, a California based start up with a vision of creating a network of charging stations for electric cars.

"California-based company Better Place will operate the stations on a subscription-based system. Owners could sign-up for a monthly plan or choose to pay as they use. The company will own the batteries, which can run upwards to $11,000, and loan them out to drivers."

http://gas2.org/2008/10/07/hawaii-to-get-electric-car-battery-sharing-program/

Organs for transplantation

The Economist has a good article summarizing The gap between supply and demand for transplantable organs around the world, and the various ways in which organs are and have been obtained, and some of the factors that get in the way of increasing supply.

The article has a table that makes the often overlooked point that the U.S. has very high donation rates of both live and deceased donor organs compared to most other countries*, despite having an opt-in system (you aren't a donor unless you (or your next of kin) says you are). But the shortage persists...

*The U.S. has the second highest live donor rate after Iran, which has a market for kidneys, and second highest deceased donor rate after Spain. When I spoke about kidney exchange at the Barcelona Clinic in 2004, the transplant coordinators there attributed their success to the professionalization of the job of acquiring deceased donor organs.

hat tip to Juan Camilo Cardenas

Auctions for airline takeoff and landing slots, continued

Feds Go Forward With NYC Airport Experiment

Plans for slot auctions at LaGuardia, Kennedy, and Newark continue, but it sounds like the fight is far from over.

"Federal transportation officials say much of the reason for nationwide flight delays is that airlines have tried to cram too many planes -- and too many small planes -- onto New York runways, and the overscheduling just isn't realistic.
To fix that, they have capped the number of flights coming into or out of those airports, and now intend to auction off a fraction of those coveted slots to airline bidders. An auction, they say, will use market forces of supply and demand to make the flight schedule more efficient."
...
" Critics of the plan are furious.
''It is simply shocking that the DOT is unabashedly continuing this ideological battle despite the staunch opposition from the entire aviation community and the independent finding that the DOT lacks the power under the law to implement the proposal in the first place,'' Sen. Charles Schumer, D-N.Y., said in a statement."

Adoption in Korea

Korea Aims to End Stigma of Adoption and Stop ‘Exporting’ Babies

"Daunted by the stigma surrounding adoption here, Cho Joong-bae and Kim In-soon delayed expanding their family for years. When they finally did six years ago, Mr. Cho chose to tell his elderly parents that the child was the result of an affair, rather than admit she was adopted."

Market for political ads

A NYT story about presidential political ads caught my eye with the following observation about the fact that ads also garner free media:

"The ad showcased another ad strategy employed by both campaigns -- it was running only on national cable, a relatively inexpensive way of drawing media attention to an issue."

Prediction markets--history

Historical Political Futures Markets: An International Perspective by Paul W. Rhode, Koleman Strumpf - #14377 (DAE)

Abstract:

Political future markets, in which investors bet on election outcomes, are often thought a recent invention. Such markets in fact have a long history in many Western countries. This paper traces the operation of political futures markets back to 16th Century Italy, 18th Century Britain, and 19th Century United States. In the United States, election betting was a common part of political campaigns in the antebellum period, but became increasingly concentrated in the organized futures markets in New York City over the postbellum period.

http://papers.nber.org/papers/W14377

A rose by any other name: marriage market version

'Bride' and 'Groom' to Be Restored to Calif. Forms

"When same-sex marriage became legal in the state on June 16, new marriage forms were issued with ''Party A'' and ''Party B'' where ''bride'' and ''groom'' used to be.
The new paperwork, which county clerks must start using Nov. 17, will have space for applicants' names next to optional boxes for checking ''bride'' or ''groom.'' "

Gaming the system, changing the rules. Pro Football

Rules evolve, as changes are made in reaction to unwanted behavior that the old rules elicit. The NFL will now allow coaches to communicate by radio directly with defensive players, reducing the need for hand signals.

The NY Times reports:
"Maybe defensive coaches should thank New England Coach Bill Belichick for trying to steal their signals. The N.F.L. had discussed giving the communication system to defenses in previous years, but in 2006, the measure fell two votes short of approval.
"Last spring, after Belichick was found to be videotaping opponents’ defensive signals, teams approved the plan by two votes. The nays were cast mostly by teams with offensive-minded coaches. The decision largely minimized the need for the hand signals that Belichick had been trying to glean. The Patriots were among the teams that switched their vote, from opposed to in favor. "

Market for Basketball Players

At 19, Plotting New Path to N.B.A., via Europe
The NY Times reports that "The N.B.A. changed its eligibility rules for the 2006 draft, requiring players to be at least a year past their high school graduating class before turning pro."
That has sent some high school stars to college, but another path is to play pro ball in Europe, while waiting for the NBA.

Market design by committee

In the NY Times, A Snarl of Regulation quotes Secretary Paulson:
"Few, if any, will defend our current Balkanized system as optimal"
It comes with a diagram of the current financial regulatory organizations.

Auctioneers and sellers: Sotheby's mixed role

The WSJ reports Sotheby's Faces Suit Over Disclosure
"Mr. Minor's attorneys say he purchased the work on advice from a Sotheby's specialist and didn't realize the auction house was selling the work to recoup money owed it by another collector. ...
Mr. Minor's suit highlights the increasingly blurred lines that can develop at auction houses between their traditional role as disinterested auctioneers and their emerging business as direct stakeholders or financiers of the work they auction. In their competition for market share and their battle to secure top art work, Sotheby's and Christie's are increasingly acquiring, trading and preselling stakes in works they auction."
...
"For buyers, deciphering the financial dealings behind a work of art has become increasingly difficult. In some cases, like Mr. Minor's, auction houses sell the work as collateral for loans. More commonly, they issue so-called "guarantees" -- promises to pay the seller a minimum price for the work sold through the auction house. The auction house has to pay the guarantee even if the work doesn't sell, so it becomes an effective stakeholder.
Guarantees have surged in recent years. Last year, Sotheby's issued $902 million in guarantees, double the amount in 2006, according to securities filings."

Slow liquidation of Wachovia Short Term Fund

The NY Times reports: Colleges Scramble as Investment Fund Freezes.
To avoid a run as it liquidates (with withdrawals outpacing the ability of the fund to sell its short term assets in an orderly way), Wachovia has limited the rate at which its investors (colleges) can withdraw.

Prison economy

The WSJ writes about currency substitutes for trade among inmates in
American prisons (subscription required):

Mackerel Economics in Prison Leads to Appreciation for Oily Fillets
Packs of Fish Catch On as Currency, Former Inmates Say; Officials Carp

"Unlike those more expensive delicacies, former prisoners say, the mack is a good stand-in for the greenback because each can (or pouch) costs about $1 and few -- other than weight-lifters craving protein -- want to eat it."

Prediction Markets at Best Buy

Best Buy is running one of the largest internal corporate prediction markets. The experiment raises interesting questions about incentives for managers whose projects are "listed" on the market, as well as questions about how to design simple interfaces that thousands of non-experts can use.

"When executives at electronics retailer Best Buy Co. want to know if a new product or idea is likely to succeed, they can seek the opinion of rank-and-file employees by turning to the company's "prediction market."

The market, called TagTrade, allows Best Buy's workers to trade imaginary stocks based on answers to managers' questions. The market's judgment has often proved to be more accurate than the company's official forecasts."

(subscription required to see full article)

The credit crisis: anatomy of a market failure

The NY Times reports on 36 Hours of Alarm and Action as Crisis Spiraled.

"...But contagion was already spreading. The problem posed by the Lehman bankruptcy was not the losses suffered by hedge funds and other investors who traded stocks or bonds with the firms. As federal officials had predicted, that turned out to be manageable. (That was one reason the government did not step in to save the firm.)
The real problem was that a handful of hedge funds that used the firm’s London office to handle their trades had billions of dollars in balances frozen in the bankruptcy. "

University tuition in England

Top universities are funded differently in the UK and the US:
Oxford's Chancellor Argues for Raising Tuition Fee .
Oxford would like to have more control over its tuition.

(Recall my earlier post: University tuition in Israel )

Auction design for bailout by treasury--Ausubel and Cramton

Peter Cramton writes: Dear Al,
Here is the longer version of my paper with Larry Ausubel on possible details of a troubled asset reverse auction. It might even be a good topic for your market design class.
"A Troubled Asset Reverse Auction" (with Lawrence M. Ausubel), Working Paper, University of Maryland, September 2008. [Presentation]

A Troubled Asset Reverse Auction
Lawrence M. Ausubel and Peter Cramton
30 September 2008
Summary
The US Treasury has proposed purchasing $700 billion of troubled assets to restore liquidity and solve the current financial crisis, using market mechanisms such as reverse auctions where appropriate. This paper presents a high-level design for a troubled asset reverse auction and discusses the auction design issues. We assume that the key objectives of the auction are to:
· provide a quick and effective means to purchase troubled assets and increase liquidity;
· protect the taxpayer by yielding a price for assets related to their value; and
· offer a transparent rules-based process that minimizes discretion and favoritism.
We propose a two-part approach.
Part 1. Groups of related securities are purchased in simultaneous descending clock auctions. The auctions operate on a security-by-security basis to avoid adverse selection. To assure that the auction for each security is competitive, the demand for each security is capped at the total quantity offered by all but the largest three sellers. Demand bids from private buyers are also allowed. The simultaneous clock auctions protect the taxpayer by yielding a competitive price for each security and allow bidders to manage liquidity constraints and portfolio risk. The resulting price discovery also improves the liquidity of the securities that are not purchased in the auctions.
Part 2. Following Part 1, the remaining quantity is purchased in descending clock auctions in which many securities are pooled together. To minimize adverse selection, reference prices are calculated for each security from a model that includes all of the characteristics of each security including the market information revealed in the security-by-security auctions of Part 1. Bids in the pooled auctions are specified in terms of a percentage of the reference price for each security.
The two parts are complementary. Part 1 quickly adds liquidity and establishes competitive market prices for many securities. Additional assets are then purchased in Part 2, taking full advantage of the market information revealed in Part 1.
Clock auctions have been used successfully in the electricity and natural gas sectors for assets worth tens of billions of dollars over the last seven years. Related approaches have been used to auction emission allowances, radio spectrum, timber rights, and rough diamonds.
The approach is feasible even on an extremely tight timetable. The development of the reference price model and data will require the most time to complete, but fortunately this is not needed until Part 2. The auctions of Part 1 can begin in a matter of weeks.
We limit the scope of the paper to taking the legislation as given and providing an auction design within the requirements of the legislation.
The paper is organized as follows. We begin by explaining the adverse selection problem that arises when different securities are pooled together. Then we provide an overview of the two-part reverse auction plan. Next we develop details of Part 1, the security-by-security auctions. We then present the motivation for the simultaneous descending clock auction. Next we present further details of Part 2, the pooled auctions. Then we explore how stock warrants and senior debt can be usefully incorporated into the purchases of troubled assets. Next we discuss the feasibility of successful implementation on an expedited schedule. We conclude that the design achieves the key objectives and can be implemented with minimal risk in a short period of time.

Job market; online and offline

A NY Times columnist surveys the uses of different job search technologies, from shoe leather, to the internet, to the social internet: Job Hunting Is, and Isn’t, What It Used to Be


"The big three sites are Monster.com, CareerBuilder.com and Yahoo HotJobs.com. Craigslist is also a popular option, as are those like Indeed.com and SimplyHired.com, which aggregate big and small jobs sites.
"Niche sites are also growing. Doctors can check out PracticeMatch.com; those seeking nonprofit work can go to Idealist.org. TheLadders.com is popular for job seekers looking for executive positions that pay more than $100,000 a year."


"Mr. Challenger suggests limiting yourself to surfing such sites only after dinner. Use the daytime to get out and meet people as much as possible."