Market for sabbatical homes

Professors and some other kinds of teachers have periodic leaves, for a semester or an academic year, that don't match well with the usual rental real estate market, in which leases tend to be for a calendar year. This opens up a niche for a specialized rental market for sabbatical homes.

A professor with an upcoming leave might look to such a market both to rent his or her own home while on leave, and to rent a home where he will be spending his leave. Since other professors are the people most likely to want to rent (in either direction) for a corresponding time period, this opens up the possibility of a dedicated marketplace in which participants in this small slice of the large real estate market can efficiently find each other. (Such a marketplace may also serve to thicken the market for people with taste for the kinds of homes that professors live in, and may make it easier for owners to verify details about potential renters that make them more comfortable to temporarily rent their homes.)

When I searched on the web (under "sabbatical homes"), I found the following contenders for a share of this market, all of which appear to operate as simple listing services (i.e. they post ads, and people can then contact each other).

SabbaticalHomes.com, WanderingEducators.com , AcademicHomes.com

Update (on the market for goat rentals, as a lawn mowing substitute): This post elicited the following email from Mary O'Keeffe:

"Your post on the sabbatical rental market brought back memories of a year my husband and I spent a couple terms as visiting assistant professors at Caltech in 1981 and rented an incredibly nice luxury Pasadena townhouse from a senior professor who was on leave during the same two terms that year. We got a great below-market price and he got responsible tenants whose schedules aligned with his needs.

Anyway, I thought you might be interested in this article about the developing goat rental market in Silicon Valley:

http://www.webpronews.com/topnews/2009/05/01/google-and-yahoo-both-use-goats-for-lawn-mowing"

Football bowls: market design by Congress?

Sports fans will no doubt be relieved to learn that the Feds are on the case: Congress examining fairness, financing of BCS system .

"Tackling an issue sure to rouse sports fans, lawmakers pressed college football officials Friday on switching the Bowl Championship Series to a playoff, with one Texas Republican calling the current system as unworkable as communism and joking it should be labeled "BS," not "BCS."
John Swofford, the coordinator of the BCS, rejected the idea of switching to a playoff, arguing it would threaten the existence of celebrated bowl games. Sponsorships and TV revenue that now go to bowl games would instead be spent on playoff games, "meaning that it will be very difficult for any bowl, including the current BCS bowls, which are among the oldest and most established in the game's history, to survive," Swofford said.
Rep. Joe Barton of Texas, who has introduced legislation that would prevent the NCAA from labeling a game a national championship unless it's the outcome of a playoff system, said that efforts to tinker with the BCS were bound to fail.
"It's like communism," he said at the House Energy and Commerce Committee's commerce, trade and consumer protection subcommittee hearing. "You can't fix it." "

While the BCS system is already a kind of camel (i.e. a horse designed by a committee), it is a considerable improvement over the unraveled market that came before it, in which bowl matchups were frequently mis-matches arranged several weeks before the end of the regular season, see
Frechette, Guillaume, Alvin E. Roth, and M. Utku Unver, "Unraveling Yields Inefficient Matchings: Evidence from Post-Season College Football Bowls," Rand Journal of Economics, 38, 4, Winter 2007, 967-982, with an online appendix).

I'm skeptical that Congress will push this very far, but it is good to know that the country is in such good shape that some of our Congress persons can devote their efforts to this.

HT: Utku Unver

College letters of rejection

Today is the day by which students must accept an offer of admission from most colleges. So it's a good time to think about those applications that were not accepted. The WSJ has a story reviewing (in the sense of a book review) the variety of ways colleges convey rejections: Rejection: Some Colleges Do It Better Than Others

"Toughest: Bates College, Lewiston, Maine. Most rejection letters, in an effort to soften the blow, follow a pattern: We're sorry, we had a huge applicant pool, all our applicants were terrific, we wish we could admit everyone. Bates, a competitive, 1,700-student college, expresses its regrets to rejected applicants and praises its applicant pool. But it delivers a more direct, and perhaps more honest, message: "The deans were obliged to select from among candidates who clearly could do sound work at Bates," the letter says."

"Stanford University sends a steely "don't call us" message embedded in its otherwise gentle rejection letter. In addition to asserting that "we are humbled by your talents and achievements" and assuring the applicant that he or she is "a fine student," the letter says, "we are not able to consider appeals." It links to a Q&A that reiterates: "Admission decisions are final and there is absolutely no appeal process." It also discourages attempts to transfer later, an even more competitive process."

"Kindest: Harvard College. Despite an estimated admission rate of about 7% this year, this hotly sought-after school sends a humble rejection letter.
"Past experience suggests that the particular college a student attends is far less important than what the student does to develop his or her strengths and talents over the next four years." "

"Most Discouraging: Boston University. To students who have family ties to the university, its letter begins: "We give special attention to applicants whose families have a tradition of study at Boston University. We have extended this consideration in the evaluation of your application, but I regret to inform you that we are unable to offer you admission."

"Biggest Spin: Numerous colleges spin the data in their rejection letters as a well-intentioned way of comforting denied students. University of California, Davis, says it had "42,000 applicants from which UC Davis could enroll a freshman class of 4,600." This implies an 11% acceptance rate. Its actual admission rate is closer to 50%, because many accepted candidates ultimately enroll elsewhere."

Cadavers for dissection by medical students

I've written before about how the purchase of cadavers (even) by medical schools for anatomy classes was for many years a repugnant and largely an illegal transaction in Europe and the U.S., but no longer. A recent review of a book of photographs of medical students posed with cadavers reveals something about the changing cultural attitudes that have accompanied this shift. Shifts of these kinds are potentially interesting to economists because of what they might tell us about changes in which transactions are regarded as repugnant more generally.

Recent news stories have covered the practice in Asia of having students treat the cadavers as honored teachers, sometimes at ceremonies attended by the families of the deceased: Taiwanese Med Students Honor Cadaver Donors.
"A Taiwanese medical school is responding to the island nation’s shortage of cadavers for study by bringing the family of the deceased fully into the program, the Wall Street Journal reports. At Tzu Chi University, medical students meet with donors' families and even compose poems to their “silent mentors” to express their gratitude. And before they wield their scalpels, they participate in a farewell ceremony."

It turns out such ceremonies have a reasonably long history. From the English language abstract of an article in a Chinese medical journal, Anatomy cadaver ceremonies in Taiwan:
"The practice of holding annual ceremonies in honor of cadaver donors in Taiwan's medical schools has a history of nearly a hundred years. It originated in Japan, where such ceremonies have been widely held in medical schools since the practice was founded by Toyo Yamawaki, who was the first medical scholar in Japan to engage in dissection of the human body and was the author of the first anatomy book to appear in Japan, the Zoshi. The practice of holding donor ceremonies was introduced into Taiwan after the Jaiwu Sino - Japanese war, when the island became a Japanese colony. The tradition was upheld in the Viceroy's Medical School, the Viceroy's College of Medicine, and Taihoku (Taipei) Imperial University College of Medicine, and continued since the restoration of Chinese power to the present. The practice of holding cadaver donor ceremonies in institutions of medical education is intended to express respect for the donor as well as to encourage the practice of cadaver donation to the benefit of medical education."

But going further back in time, it sounds as if the Asian experience may have been quite similar to the European history regarding cadavers. Here is the English abstract of an article published in Japanese on the History of collecting cadavers in Japan
"This study investigated how and from where medical students had acquired cadavers for research throughout Japanese history. At the beginning of dissection in the mid Edo era, they cut up executed prisoners granted by the Tokugawa Shyogunate to study internal body parts. After the Meiji Restoration, the social mechanism of delivering cadavers underwent a complete transformation and they began to utilize 1) dead bodies of inpatients who had received free medical treatment and 2) unclaimed bodies mainly from homes for the aged and prisons. It was quite recently that "kentai", voluntary body donation, became common practice of collecting cadavers. Consequently the history of cadavers submitted to dissection faithfully reflects the relation between medical science and society."

I can't help being reminded of the current cautious attempts in the U.S. to encourage organ donation for transplantation, about which I blogged yesterday: Tax credits for organ donors, and medals.

Tax credits for organ donors, and medals

The issue of what compensation or reimbursement if any to allow for organ donation continues to be raised, very slowly, cautiously, and modestly in American legislation. The latest attempt, in the current (111th) Congress: Living Organ Donor Tax Credit Act of 2009 (Introduced in House), proposes

"In General- In the case of an individual who donates a qualified life-saving organ of such individual for transplantation into another individual during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the sum of--
`(1) unreimbursed costs paid by the taxpayer in connection with such transplantation, and
`(2) any lost wages of the individual in connection with such transplantation.
`(b) Limitation- The credit allowed under subsection (a) with respect to any individual for any taxable year shall not exceed $5,000."


If this sounds excessively cautious, note that the previous (110th) Congress passed, and on October 14, 2008, President George W. Bush signed into law, the Stephanie Tubbs-Jones Congressional Gift of Life Medal Act (HR 7198) (Public Law No: 110-413). (It was passed without opposition in both houses of Congress). The Congressional Research Service summary of the law reads (emphasis added)

"10/14/2008--Public Law.
(This measure has not been amended since it was introduced. The summary of that version is repeated here.)
Stephanie Tubbs Jones Gift of Life Medal Act of 2008 - Makes any organ donor, or the family of any organ donor, eligible for a Stephanie Tubbs Jones Gift of Life Medal.
Requires the Secretary of Health and Human Services to direct the Organ Procurement and Transplantation Network to establish an application procedure, determine eligibility, and arrange for the presentation of medals.
Allows only one medal per family. Requires that such medal be presented to the donor or, in the case of a deceased donor, the family member who signed the consent form authorizing the organ donation.
Authorizes the Network to collect funds to offset expenditures relating to the issuance of medals.
Prohibits federal funds from being used to carry out this Act. "

Private sales of artworks, in a down market

Auctions are good for price discovery, and price discovery is particularly important for "common value" goods, i.e. goods whose value to each buyer may be substantially influenced by what other buyers are willing to pay. So, what should you do if you want to unload a common value asset but want to avoid disseminating potentially bad news about what it might be worth? The NY Times reports More Artworks Sell in Private in Slowdown .

"During good times, an auction is the obvious choice for any collector wanting to sell a work of art. But as the recession takes its toll, many collectors have changed strategies and retreated to the more hidden, and potentially less lucrative, world of private sales.
"For many sellers, the driving factor is fear. Fear that their friends will discover they need money. Fear that if a Picasso or Warhol, Monet or Modigliani does not sell at auction, it will be considered yesterday’s goods.
If they do not have to, fewer collectors are putting their holdings up for auction at Sotheby’s and Christie’s, where prices and profits have plummeted. But executives at both houses say business in their private-sale departments has more than doubled in recent months. "
...
" “The game has definitely shifted,” said Christopher Eykyn, a former head of Impressionist and modern art at Christie’s who is now a dealer in New York. “A lot of clients don’t want to be seen selling, so the private route is suddenly more attractive.” "
...
"There are exceptions, of course. Estates continue to go to auction because executors have a fiduciary responsibility and prices are rarely challenged after public sales.
For the auction houses, private sales are lucrative and inexpensive. Generally Sotheby’s and Christie’s charge 5 to 10 percent of the purchase price of an artwork, depending on its value and the agreement with the seller. (If a work goes to auction the houses charge sellers 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million and 12 percent of the rest.) Money earned from private transactions comes cheap, without expenses like advertising, insurance and shipping associated with auctions.
The dismal sales in New York in November, when night after night paintings by Monet and Matisse, Bacon and Warhol went unsold, meant big losses for Sotheby’s and Christie’s, which had a financial interest in most of this expensive art in the form of guarantees, undisclosed sums paid to sellers regardless of a sale’s outcome.
After the fall auctions, both houses immediately began changing the way they conduct business. In addition to announcing hundreds of layoffs, with perhaps more to come, they mostly halted the practice of guarantees and stopped giving consignors a cut in the fees they charge buyers. The days of publishing luscious catalogs have ended as well.
For their part, dealers say that their phones started ringing after Sept. 15, the day Lehman Brothers filed for bankruptcy. “It’s been pretty steady ever since,” said Steven P. Henry, director of the Paula Cooper Gallery in Chelsea. He said he had been getting inquiries about selling art from people who had investments with Bernard L. Madoff, or who had seen the value of their stock or real estate assets collapse."

Rankings of universities: vintages and coordination of expectations

US News and World Report has published its annual ranking of American universities. One thing that the rankings make clear is that, while they may move around a bit from year to year (and the precise rankings are not so informative), it takes a long time to rise to the top.

This year the first place goes to the oldest American university, founded in 1636, and spots 2 and 3 go to universities established in 1746 (as the College of New Jersey), and 1701. Two universities that opened more than a century later, in 1861, and 1891 , are tied for 4th place. The two universities tied for 6th are of different vintages, 1891 and 1755, as are the three tied for 8th place, 1754, 1838, and 1892. The top dozen ranks are filled out by universities open for business since 1769, 1855, and 1856.

At number 17, Rice University, opened in 1912, seems to be the highest ranked university on the list to have begun in the 20th century.

So, while ranking is far from perfectly correlated with age (which is in turn correlated with wealth, among other things), a university that wants to rise to the top of these rankings must take a long view.

It would be good to know more about how rankings (and changes in rankings, especially changes of more than a few places) influence the success of universities in attracting students and faculty. Compared to fundamentals, the rankings themselves shouldn't do much (although they are correlated with features that make a university a desirable place to study and teach). But rankings may also serve as a coordination device for students. For example, if two otherwise similar universities have substantially different rankings, e.g. one is listed in the top 20 and the other in the top thirty, it may be that over time the top 20 university will attract better students, and become a better university. If so, universities that concern themselves with signaling their quality by trying to raise their ranking may not be misguided.

Rankings of international universities (for which the precise rankings are even harder to interpret as being deeply informative) reveal that age is less well correlated with ranking than might appear from looking at American universities alone. For example, in this ranking and in this one, Oxford and Cambridge Universities, both so old that no reliable founding dates are known (although 1096 and 1226 are mentioned in their histories) are both in the top 10. But the much younger American universities dominate the top of the lists, where the equally old universities in continental Europe are scarce.

Update: Here's a November 2009 article from across the pond, which suggests that independence of universities from government may play a role: The American lesson: How to be top

Market for bogus colleges

Colleges not only educate students, they also give them credentials and certifications. So it is not too surprising that there is both a demand for credentials without education, and a supply.

In the United States, the focus seems to be on degrees. (If you type "college degrees" into Google, you find a number of intriguing options, including one that offers a degree in a week. Of course, maybe they have discovered a teaching and learning technology that we should all emulate...)

In Britain, it appears that the market focuses on obtaining a letter of admission, for immigration purposes: Fake colleges enable foreigners to disappear through the loophole.

"Bogus colleges set up to help foreign workers to enter Britain illegally have long been considered the biggest loophole in British immigration controls.
Often little more than two rooms over a takeaway restaurant or newsagents, the colleges have been enrolling hundreds of “overseas students” each year to enable them to obtain visas.
Phil Woolas, the Immigration Minister, described the bogus colleges last month as the Achilles’ heel in the immigration system. The Government announced a crackdown on them in 2003 but regulations did not come into force until the end of last month.
Under the new rules, all universities, colleges and schools must be approved by the UK Border Agency before they can issue visa letters to foreign students. Of the 2,100 institutions that applied for a sponsor licence, 467 have failed the vetting. More than 3,000 other colleges estimated to have been accepting foreign students have not applied for a licence."

One of the latest terrorist suspects to be arrested in Britain appears to have entered Britain from Pakistan with a visa from a bogus college: Terror suspect was enrolled at college shut down by Home Office

Update: a subsequent story, 5/21/09 Sham colleges open doors to Pakistani terror suspects

Efficient random allocation of discrete goods, Mihai Manea

In this season of Ph.D. dissertation defenses, Mihai Manea just completed the last defense that I'm intimately involved in. His work includes papers on the ex-ante efficiency of allocations involving lotteries in large markets.
This is a topic that comes up in school choice systems, for example, with the random element coming from the fact that a given school may not have the capacity to serve all the students who would like to enroll, so that some random tie breaking procedure has to be employed.

An important paper by Bogolmanaia and Moulin (2001) noted that random serial dictatorship, although ex post efficient, may be ex ante inefficient. They proposed an "ordinally efficient" random mechanism called the probabilistic serial mechanism. An ordinally efficient mechanism chooses a probability matrix (assigning each player some probability of obtaining each object) that cannot be Pareto improved upon by another random assignment that first order stochastically dominates the first.

Random serial dictatorship is the procedure for allocating indivisible goods by putting the claimants in a random order, and then allowing the first to choose the object he prefers, the second to choose the object he prefers from those that remain, etc. This results in a lottery over ex post efficient allocations, which B&M noted may be an inefficient lottery: it induces a stochastic allocation matrix with the property that some claimants would be willing to trade some of their probability of getting one object with one another, to yield a mutually preferable stochastic matrix. One of Mihai's early papers shows that efficient probability-exchange contracts of this sort can be written by agents agreeing to exchange their orders in some realizations: i.e. the agents can write an ordinally efficient ordering-exchange contract that they all prefer to the random serial dictatorship allocation in the sense of first-order stochastic dominance. (Random Serial Dictatorship and Ordinally Efficient Contracts, International Journal of Game Theory 2008.)

One drawback of the probabilistic serial mechanism is that, while it is ordinally efficient (unlike random serial dictatorship) it does not make it a dominant strategy for agents to state their true preferences (again, unlike random serial dictatorship). Mihai and Fuhito Kojima show that this drawback goes away when the number of identical copies of each object is sufficiently large: Strategy-Proofness of the Probabilistic Serial Mechanism in Large Random Assignment Problems . Their result isn't just a limit theorem, rather, they show that there is a finite number such that, when the number of identical copies of each object is larger than that, the psm is strategy proof.

Separately, Mihai and Fuhito study the efficiency of random serial dictatorship in different ways as markets grow large. Mihai shows that , as the market becomes large (in particular, as the number of types of objects grows along with the number of participants), the proportion of preference profiles at which rsd is ordinally inefficient goes to one in the limit. (Asymptotic Ordinal Inefficiency of Random Serial Dictatorship, forthcoming Theoretical Economics.)

Fuhito, together with Yeon-Koo Che, shows, in a market that grows large in a different way (the number of copies of each object type grows along with the number of participants) that random serial dictatorship converges to the probabilistic serial mechanism. (Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms , 2008.)

In general, looking at efficiency ex-ante as well as ex post opens up new avenues for investigation, and how these interact in large markets has been a fruitful way to start thinking about them.

Welcome to the club, Mihai.

Behavioral contract design; Steve Leider

Steve Leider defended his dissertation last week. He's an eclectic experimenter, but among his varied interests is how insights from psychology might change our view of contract design. In particular, if people are nicer than the standard economic model supposes (e.g. more inclined to reciprocate favors, more inclined to keep promises and uphold social norms), how might that change our views of how contracts might function, and therefore how they should be structured?

Among his papers, the following best exemplify that part of his work.

Norms and Contracting (with Judd Kessler) (Job Market Paper) Abstract: We argue that agents create norms specific to their relationships, particularly through the contracts they establish. We build a theory of how the enforceable and unenforceable aspects of a contract determine the norm, and how norms impact behavior. We then demonstrate experimentally that even totally incomplete contracts (i.e. contracts with no enforceable restriction on actions) move behavior substantially towards the first best in a variety of games. A contract with only unenforceable agreements is often more effective than a contract with only enforceable restrictions. Combining enforceable restrictions with an unenforceable agreement is frequently no more effective (and sometimes strictly less effective) than an unenforceable agreement alone. Consistent with our modeling approach that violating the norm creates disutility, many subjects often choose not to make unenforceable agreements, despite earnings substantially higher payoffs with the agreement.

Directed Altruism and Enforced Reciprocity in Social Networks (with Markus M. Mobius, Tanya Rosenblat, and Quoc-Anh Do) [Forthcoming in the Quarterly Journal of Economics] Abstract: We conduct online field experiments in large real-world social networks in order to decompose prosocial giving into three components: (1) baseline altruism towards randomly selected strangers, (2) directed altruism that favors friends over random strangers, and (3) giving motivated by the prospect of future interaction. Directed altruism increases giving to friends by 52 percent relative to random strangers, while future interaction effects increase giving by an additional 24 percent when giving is socially efficient. This finding suggests that future interaction affects giving through a repeated game mechanism where agents can be rewarded for granting efficiency-enhancing favors. We also find that subjects with higher baseline altruism have friends with higher baseline altruism.

Contractual and Organizational Structure with Reciprocal Agents (with Florian Englmaier) [Submitted] Abstract: Empirically, compensation systems generate substantial effort despite weak monetary incentives. We consider reciprocal motivations as a source of incentives. We solve for the optimal contract in the basic principal-agent problem and show that reciprocal motivations and explicit performance-based pay are substitutes. A firm endogenously determines the mix of the two sources of incentives to best induce effort from the agent. Analyzing extended versions of the model allows us to examine how organizational structure impacts the effectiveness of reciprocity and to derive specific empirical predictions. We use the UK-WERS workplace compensation data set to confirm the predictions of our extended model.

Gift Exchange in the Lab and in the Field - It is not (only) how much you give ... (with Florian Englmaier) Abstract: We build on the theoretical results from our companion paper, Englmaier and Leider (2008), that an important aspect in determining the effectiveness of gift exchange relations is the ability of the agent to “repay the gift” to the principal. To test this hypothesis, we conduct a real effort laboratory experiment and a field experiment where we vary the effect of the agent’s effort on the principal’s payoff. Furthermore we collect additional information that allows us to control for the agents’ effort costs and whether they can be classified as reciprocal or not. From our model we derive nontrivial predictions about which is the marginal agent in terms of ability affected by our experimental variation and how different types of individuals, selfish and reciprocal, will react to it. The experimental data lend support to our hypotheses.

Steve's email address will have a "umich.edu" in it starting next semester, when he starts work at the University of Michigan's Ross School of Business.

Welcome to the club, Steve.

Course allocation, by Eric Budish

The problem of allocating courses to students is a famously hard problem of market design. The reasons include the fact that, in most applications, it isn't acceptable to sell the most desirable class places at higher prices to richer students. Also, students take multiple classes, and may have preferences for how their bundle is composed. So the problem is substantially more difficult than how to auction multiple goods, or how to allocate each student a single place, as comes up e.g. in assigning students to schools.

Eric Budish, who defended his Ph.D. dissertation at Harvard this week, has made a substantial, practical dent in the problem. His motivation comes from a detailed study, with Estelle Cantillon, of how classes are assigned to second year MBA students at the Harvard Business School, and how students approach this assignment problem strategically: Strategic Behavior in Multi-Unit Assignment Problems: Theory and Evidence from Course Allocations .

Largely motivated by what they learn about the good and not so good properties of the HBS mechanism, Eric then proposes a new mechanism: The Combinatorial Assignment Problem: Approximate Competitive Equilibrium from Equal Incomes. Eric's work, like market design in general, is eclectic. Among other things, he formulates new notions of what constitutes "fair" outcomes in cases hedged in by the impossibility results that abound when allocating indivisible goods.

Although allocating multiple indivisible items to each student makes the standard economic goals involving efficiency and incentives more difficult to achieve, it gives the designer somewhat more leeway to think about fairness, since although class places are indivisible, the package of classes that each student gets is not. And Eric’s investigations of existing course allocation institutions has convinced him that concerns about avoiding excessive ex-post unfairness are an important constraint on what kinds of mechanisms can be implemented in practice.

Eric's mechanism looks like it has legs, and may be ready for practical implementation in the not so distant future. Perhaps he'll get a chance to have more than the usual impact next year when he brings market design to U. Chicago's Booth School of Business (until recently Chicago GSB).

Welcome to the club, Eric.

Market for authenticity: sports memorabilia

Sports memorabilia from specific games can be valuable, but used to be hard to authenticate. No more. Now Major League Baseball Fights Fakery With an Army of Authenticators, on the spot to tag items as they become sports history.

"Nothing is too mundane to be authenticated, if deemed potentially valuable. Cans of insect repellent used to combat the midges that swarmed the 2007 playoffs in Cleveland were authenticated. So were urinals pulled from the old Busch Stadium in St. Louis and office equipment from since-razed Veterans Stadium in Philadelphia. The Phillies are cutting the clubhouse carpet from last season into authenticated 18-by-24-inch mats. "

Indeed, "...every game has at least one authenticator, watching from a dugout or near one. The authenticators are part of a team of 120 active and retired law-enforcement officials sharing the duties for the 30 franchises. Several worked the home openers for the Yankees and the Mets, helping track firsts at the new stadiums. They verified balls, bases, jerseys, the pitchers’ rosin bag, even the pitching rubber and the home plate that were removed after the first game at Yankee Stadium. "

"With Yankee Stadium emptied after the opening 10-2 loss to Cleveland, Lubrano watched groundskeepers shovel dirt from the mound and home plate into five-gallon buckets. Lubrano sealed the lids with tape, then stuck holograms on each bucket, lid and seal. The dirt will be divided into small containers at a warehouse, in front of an authenticator."

How's that for product differentiation?

Update: Tyler Cowen at MR has a post on a related subject, titled Department of Unintended Consequences. Apparently, fraudulent items in the (unauthenticated) market for antiquities on eBay have driven out genuine items, driving down prices (for genuine as well as fake items, since there's no authentication) with the unintended but welcome consequence that grave robbing has become less profitable.

Giving anonymously, through an intermediary

I recently blogged about a service set up to enable people to give (relatively) small gifts anonymously, Giving anonymously, for a fee .

Larger gifts, e.g. to university endowments, are also often given anonymously. But "anonymous" is a relative term, and often someone at the gift-receiving institution knows who the donor is. (Here at Harvard, my HBS office is in a building called Baker Library, whose southern side now sports a new wing called Bloomberg. It was anonymous for a while; all we knew was that the donor wished his identity to remain unknown until he had completed his election for a second term as mayor of New York.)

Now a number of gifts to universities have been made behind a deeper than usual veil of anonymity: Mystery donors give over $45M to 9 universities.

"A mystery is unfolding in the world of college fundraising: During the past few weeks, at least nine universities have received gifts totaling more than $45 million, and the schools had to promise not to try to find out the giver's identity.
One school went so far as to check with the IRS and the Department of Homeland Security just to make sure a $1.5 million gift didn't come from illegal sources.
"In my last 28 years in fundraising ... this is the first time I've dealt with a gift that the institution didn't know who the donor is," said Phillip D. Adams, vice president for university advancement at Norfolk State University, which received $3.5 million.
The gifts ranged from $8 million at Purdue to $1.5 million donated to the University of North Carolina at Asheville. The University of Iowa received $7 million; the University of Southern Mississippi, the University of North Carolina at Greensboro and the University of Maryland University College got $6 million each; the University of Colorado at Colorado Springs was given $5.5 million; and Penn State-Harrisburg received $3 million.
It's not clear whether the gifts came from an individual, an organization or a group of people with similar interests. In every case, the donor or donors dealt with the universities through lawyers or other middlemen. Some of the money came in cashier's checks, while other schools received checks from a law firm or another representative.
All the schools had to agree not to investigate the identity of the giver. Some were required to make such a promise in writing."

Market for hand crafted food, continued

When I last wrote about the market for hand crafted food, I focused on a concentration of producers in Brooklyn. The fact that there are several of them in the same vicinity allows them to support each other and a growing common set of retailers and customers.

Around Passover, there's also an export market of sorts, and we recently enjoyed hand made "shmura" matzah from both Brooklyn and the nearby Long Island town of Lawrence (made respectively by the Boro Park Shmura Matzoh Bakery and by Tiferes Matzah). Matzah is unleavened bread, and shmura ("watched") matzah is baked very quickly after the wheat is ground into flour and water is added, to make sure no leavening takes place. The handmade matzot are round, and much bigger and denser than machine made matzah, and we always buy enough to enjoy for several days after the Passover seders.

The market for kosher food is a very interesting one, because while it is a very important one for observant Jews, most commercially produced kosher food in the United States is bought by non-Jews (since Jews constitute such a small part of the population). In some cases, non-Jewish consumers may not even notice that the food is kosher: for processed food, the kosher symbols are often inconspicuous. (The New Yorker recently had an article on the growing export of kosher food from China.) In other cases, e.g. for kosher meat, which is more expensive, consumers may be attracted by the extra steps of inspection. In any event, the fact that there is a wide market for kosher food increases its availability and lowers its cost.

A guest also brought us some handmade goat cheese, from Twig Farm in Vermont. As in Brooklyn, Vermont seems to support a variety of handmade food producers who support each other. Along with the goat cheese from their own goats, came some cow's milk cheese, made by a neighboring organic farmer.

College admissions waiting lists: advice on signaling

I last wrote about College admissions waiting lists on March 31, when the most selective colleges were just sending out their acceptances, rejections, and waitlist decisions. Now there is an interregnum, until the May 1 deadline for students to decide which college acceptances to accept. Only after that will colleges know how many students have accepted and rejected them, and hence how many empty places they still have, and how many admits they can make from their waitlist.

Most colleges don't want the waitlist process to drag on too long. But the waitlist process is potentially lengthy, since students admitted from the waitlist need some time to decide, and if some of these ultimately decline, then new students must be admitted from the waitlist later, and so on. So what colleges can do is give some preference to students on the waitlist who they think are more likely to accept an offer. For this reason colleges ask students who are offered a position on the waiting list to actively indicate that they wish to remain on it (this removes from consideration those who have already been accepted to a college they know they prefer). But it also leaves some scope for students to give further indications of their interest, and many colleges explicitly encourage this.

For example, the MIT Admissions Office blog on waitlists says
"If you are still interested in MIT, you should stay in contact with us. A letter, a phone call, notes from people who know you well... these are good things to provide. Please always be very nice in all of your interactions with us! Keep us up to date all the way through May 1 and beyond if you remain interested."

That is, just as in the initial admissions process, there is room for signaling.
The Boston Globe reports how signals of interest to colleges at this stage occupies the attention of some students and admissions offices: Students hope to beat college waiting list.
"... in the elbows-out world of college admissions, savvy hopefuls, often with the help of private advisors and aggressive high school counselors, are launching full-scale campaigns to spring themselves from the list.
In-the-know seniors are writing letters assuring admission deans that if admitted, they will go. They're e-mailing updates on their second-semester senior grades, spring awards, and other academic breakthroughs. (There's no room for senioritis if you're on a waiting list.)
And they are placing one, just one, well-timed phone call, a step that can spur an admission officer to pull the student's file and disclose whether there is something else he or she can do to boost the chance of admission.
"It's too bad if students don't know to follow up," said Tom Parker, dean of admission and financial aid at Amherst College, which expects to take about 35 students from its list of 1,000. "If you're going to get off the wait list, you're really going to have to demonstrate a significant interest."
Not that this is something many colleges publicize when they inform applicants that they have landed in admissions limbo. While admission deans admit they can be lobbied, they insist that, technically, they do not require any additional information. And schools are quick to say that they do not penalize students who fail to follow up, especially if they come from low-income communities where high school counselors are often overwhelmed.
"We wouldn't want to overlook a student who doesn't know she can even do that," said Jennifer Desjarlais, dean of admission at Wellesley College.
But all things being equal, especially as the swooning economy has added a new volatility to the admissions process, students can vault to the top of the pack by writing a letter about why a college is their number one choice and promising to attend if accepted, said deans at numerous colleges."

Of course, some signaling strategies convey negative information:
"While demonstrating interest and presenting updates often helps in the final rounds of evaluations, tread carefully. Go too far, admission deans warn, and you will snuff out your chances.
Do not stalk admission officers, camp out in front of their office, or flood their inboxes with daily e-mails. ("That's like the kiss of death," said Richard Nesbitt, director of admission at Williams College.)"

The NY Times blog on college admissions advises one parent of a waitlisted daughter:
"In terms of pursuing her wait-list offer, she should send an e-mail to the regional admissions officer stating her strong and unqualified interest (being straightforward and unequivocal: if admitted I will enroll, etc). We also think it is important to send a letter to the admissions office with any recent accomplishments. In the letter it is helpful for the admissions committee to be able to discern genuine interest by reiterating why you think the school would be such a good match.

So...if there's a waiting list you are waiting for, and you haven't done so already, send an email to the admissions office. And then, to quote the final line from the MIT admissions blog
"... be patient. There won't be any waitlist news until after May 1."

Why people don't sign organ donor cards

In a report titled The Reluctant Organ Donor, the NY Times wellness blog reports that
"Only 38 percent of licensed drivers are registered to be organ donors, despite the fact that many states offer a simple registration process that typically just requires a signature when obtaining or renewing a driver’s license. An online survey of 5,100 people conducted by the advocacy group Donate Life America found that many people still harbor fears about what organ donation really means.
23 percent of people fear they are not healthy enough or are too old to donate their organs.
50 percent of respondents are concerned that doctors will not try as hard to save them if they are known to be an organ donor.
44 percent believe there is a black market in which people can buy or sell organs or tissue.
57 percent question whether or not a person can recover from brain death."

"Donate Life America is launching a page on Facebook at www.facebook.com/donatelife to make it easier for users to register as donors. Just click on the link and then click on the “Register” tab."

Plug-in hybrid cars, and the retail market for electricity

The news is full of plug-in hybrid cars, i.e. cars with both an electric and a gasoline powered motor, which can be recharged overnight from your household electric outlet. See e.g.MIT's Technology Review on First Plug-in Hybrid to Be Sold in the United States or the AP onAuto industry on plug-in hybrids and electric cars, which begins

"Several automakers are developing plug-in hybrid vehicles and electric cars that could help meet President Barack Obama's goal of putting 1 million plug-in hybrids on the road by 2015. Many industry officials say the goal is a worthy one but will be difficult to meet. "

One difficulty not discussed in these articles is how retail electricity is sold. If your electricity bill is like mine, it consists of charges for power consumed, and charges for delivery and maintainence of the network. That is, you are charged both for the variable cost of the electricity you use, and a share of the fixed cost of the infrastructure. However, and strangely, you are charged for both by the kilowatt hour of electricity you use. That is, for each kilowatt hour, you pay an electricity part and an infrastructure part (and you can see this because your electricity utility is now required to offer its delivery service to multiple providers...)

This has some strange consequences, not least of which is that it makes additional electricity usage much more expensive than it would be if you instead were charged an access fee to cover your share of the infrastructure (including the peak load generating capacity), and a separate energy usage fee. Then the marginal additional kilowatt would be cheaper. In that case it might be economical for you to buy an electric car that would charge itself by being plugged in overnight, or even heat your home with electricity.

Match Day for New Doctors, the book

When I blogged last month about Match Day for new doctors, I mentioned Brian Eule's new book, Match Day: One Day and One Dramatic Year in the Lives of Three New Doctors. A copy of the book arrived in my mailbox last week, with a note from the author, who had interviewed me while writing it.

I've noticed before that good science writers tend to write about scientists at least as much as they write about science. But I guess I am not in the habit of anthropomorphizing markets, since I was nevertheless surprised to read the following characterization of the market for new medical residents.

"If you wanted to put a face on this faceless machine, it would have a thick black beard, beginning to go gray. It would have a receding hairline. It would wear glasses, squint when smiling, and present a big forehead adding to its contemplative appearance. It would look, in this case, much like an economist at Harvard University named Alvin Roth."

Fortunately, most of the story is about the three couples he follows through the resident match and their first year of residency. I didn't reach a point at which I could put the book down for the first time until after the first hundred pages, since the story carried me along, and I wanted to find out where they matched. Way to go, Brian.

Real money trading in Massively Multiplayer Online Games

Want to know the current price of gold? Check out http://www.mysupersales.com/. You won't find the traditional store of value there, but rather the virtual gold used in massively multiplayer online games like World of Warcraft. You could earn gold by playing the game, and use the gold you earned in the game to buy equipment "in-game". But you can also buy gold from "gold farmers," in China and elsewhere, using real money, and having the gold delivered to you inside the game. Here's a paper by Richard Heeks of Manchester that says it's a surprisingly big business: "It employs hundreds of thousands of people and earns hundreds of millions of dollars annually. "

Real money trading for online gold also involves a set of transactions that some gamers and game operators find repugnant: operators go to great lengths to stop it. Here's a statement against the practice by the proprietors of World of Warcraft. And an article at a gamer site begins
"Is gold selling like pornography: something more of us do than admit? A shameful secret, something indulged alone and at night, in front of the screen; or during a lunchbreak, safely away from a partner, when a quick credit card or PayPal transaction will go unnoticed by others in-game?"

A further article recounts how some game operators have tried changing the rules on in-game transactions to make real money purchases less practical, while other games have decided to allow players to enter for free, and finance the game by officially selling equipment for real money:

"The most probable trend is that the games become 'free-to-play', and the operators sell gold or other in-game items by themselves. There are a lot of so-called F2P MMOs, and they mainly get revenue from selling in-game items.
"One of the most famous examples is a Chinese online game developer and operator - Giant Interactive Group, they got listed in the NASDAQ by selling in-game items in ZhengTu, a game they developed and published in China. So I don't think the game publishers will be willing to share the cake with the gold sellers.
...
"According to Vili Lehdonvirta of the Helsinki Institute for Information Technology, an expert on virtual consumerism, real money trading is now well-established outside of the MMO sphere.
"Several Korean online games successfully sell performance-based items to users," he says in his recent report Virtual item sales as a revenue model: identifying attributes that drive purchase decisions. "

HT: Rich Dougherty (who describes himself as an avid reader of Market Design).

Forward contracts on sporting events

How should tickets for big sporting events be sold, in advance of information about which teams will play in them? American baseball's World Series, the NCAA's basketball Final Four, and other such events are elimination tournaments. So it is known well in advance that there will be some important games, but which teams will play (and hence which fans will most want to attend) is known only quite near the event.

This makes the market less thick than it might be far in advance, and requires fast market clearing once the relevant information becomes known. In turn, this opens the market to third party brokers, and scalping.

Contingent contracts might be a solution (e.g. a market in which I can buy a ticket to the World Series contingent on the Boston Red Sox being in the game).

Felix Salmon blogs about a paper exploring a related idea (because of a fear that contingent contracts might be regarded as repugnant): Selling forwards for sporting events.

"Preethika Sainam of Indiana University, along with two colleagues from Chapel Hill, has an interesting paper suggesting that sports organizations shouldn’t sell tickets to big sporting events, like the finals of the Final Four, where the teams who will be playing are unknown. Instead, they say, they should sell options to buy tickets at a certain price once it’s known who’s going to be playing. This system, they say, will raise more money in ticket sales, will make fans happier, and will reduce scalping.
The interesting thing is that reading between the lines of the paper, it seems that selling options is actually the second-best solution to these problems. The best solution would be to replace some (but not all) of the tickets with team-specific forwards, which expire worthless if that team doesn’t make the finals. That would allow the “team-oriented” fans to buy forwards rather than tickets which they might not want if their team fails to make it to the finals; it would allow “game-oriented” fans to buy tickets to the finals just like they can right now; it would mean that many more tickets could be sold in total (for the final match-up, you can sell 32 times as many forwards as there are seats), which would reduce the supply/demand imbalance which often drives scalping.
Professor Sainam, however, reckons that the forwards idea is a non-starter, for reasons of optics: she worries, she tells me, “that fans could perceive the league as profiting unduly from the situation”. And so the options option is the next best thing. "

HT: Steve Leider (on his way to Michigan).

Update on the Economics Job Market "Scramble"

The Economics Job Market “Scramble” for New Ph.D.s opened for registration on March 24, became visible to participants the next week, and was scheduled to go dark on April 11. Its purpose was to give applicants and employers a low cost way to see who was still on the market.

It's too early to know how many interviews were conducted with the help of the scramble, or how many of those will eventually result in hires. (In fact, the market is so decentralized that there is no reliable way to gather data on that, beyond surveys that the AEA sends out to participants). But there is information on how many applicants and employers registered for the scramble.

There were 395 applicants registered, of whom 362 made further information about themselves available at a URL.
223 of these show up when sorted as 2009 PhD candidates, 47 as 2008 Ph.D.s, and 125 before 2008. (These numbers aren't quite right, since they account for all the candidates, and I noticed at least one without a Ph.D.)

There were 78 employers, advertising 87 positions. 17 of the 87 positions were not made visible (even) to registered applicants; these employers preferred to be able to contact applicants but not to be contacted by them.

The visible employers consisted of
20 universities with graduate programs
18 four year colleges
10 consulting or research
7 Federal government
4 Banking or finance
2 other

The registered employers who chose to remain invisible consisted of:
8 Universities with grad programs
3 four year collegs
3 Federal government
2 consulting or research
1 banking or finance

Good luck to all those still seeking a match.

Market for sugar daddies

Not all dating sites have marriage as their goal.

The NY Times Sunday magazine has an article called Keeping Up With Being Kept, about the website SeekingArrangement.com, which advertises itself as "the elite sugar daddy dating site, for mutually beneficial relationships." As the site makes clear, money is part of the benefit in one direction, but as the story also makes clear, the line between dating and sex work is fuzzy, and some of the relationships that develop are potentially rewarding.

Apparently the law is on the side of the site: "...since the 1970s, courts have ruled that as long as the woman is paid for some service besides sex — housecleaning, companionship — the arrangement is not the equivalent of prostitution."

The complication is summed up by one young woman who apparently has some experience with this marketplace:

"“When these sugar-daddy relationships go the way I think they should go, the lines are pretty blurry between that and a typical boyfriend-girlfriend relationship,” she said. “And when they go the way I don’t think they should go, the lines are blurry between that and sex work.” "

The website also suggests that you "Visit our other dating sites: SeekingMillionaire.com (Millionaire Dating) & SeekingFantasy.com (Adult Dating)"

The Times story puts the matter in (market) context by considering some of the history of courtship :
"MOST PEOPLE WOULD LIKELY BE appalled to learn that a daughter — or father — was using SeekingArrangement.com. Beth Bailey, a Temple University historian of courtship, said that her first reaction to the site was “revulsion.” But when she reconsidered it within the historical context of dating, she had a somewhat different response.
Heterosexual relationships, including marriage, have long involved economic transactions, but Bailey points out that when men provided financial security, they traditionally did so in exchange for a woman’s sexual virtue (and potential to bear and rear children), not for sexual thrills. For that, they often turned to prostitutes and mistresses, involving a more frank money-for-sex exchange. It’s only in the last century that money has been traded — albeit indirectly — for sexual attention from “respectable” unmarried women. In the early 1900s, courtship shifted from girls’ porches or parlors to a commercial venture: a date. Etiquette manuals of the time were explicit — boys were to pay for meals, entertainment and transportation, and in return, girls were to provide well-groomed company, rapt attention and at least a certain amount of physical affection."

Market design and experimental economics

Noam Nisan asks "should “algorithmic game theory” (in the broad sense) also put significant energy into experimentation? " Or should experiments remain in the province of economists, and market designers who deal with human (as opposed to computer) agents? He sees some possibilities that computer scientists should also entertain experiments, about the connection between computerized systems and their human users.

This of course raises the possibility that the interaction of computer science theorists with economists will expand to include psychologists doing cognitive engineering, the part of human factors engineering most concerned with cognition, and human-computer interaction. (Here's my favorite cognitive engineering website, soon to be updated.)

Nisan also has some interesting asides, and one particularly caught my eye:
"I never quite understood the difference between experimental economics and behavioral economics. My impression is that it is simply a question of your attitude towards game theory: experimental-pro, behavioral-con. The anti-game-theory bias is probably not that of its founders Kahneman and Tversky. Shortly after winning the Nobel prize in economics in 2002, I heard Kahneman talk at a dinner held by the Hebrew University’s rationality center. His point was that while most psychologists would immediately dismiss the economic assmptions of rationality as absurd regarding human beings, the greatness of his co-author Tversky was to realize that there was an important underlying truth to this point of view, and hence that it was interesting to carefully study its limitations. "

I think that this view was more accurate in the early days. Today, I think that "behavioral economics" means the broad effort to include (a little or a lot) psychology in economics, and in that sense (to paraphrase),we are all behavioral economists now, whether or not we do experiments. Experimental economists, however, do experiments.

Why can't you eat horse meat in the U.S.?

The first sentence of Repugnance as a Constraint on Markets asks "Why can't you eat horse meat" in California? The answer is that it's against the law. But while similar bills to outlaw the sale of horse meat for human consumption have passed by big majorities in the U.S. House of Representatives, they have never managed to pass into law. Nationally such bills are opposed (as they were in California) by many horse breeders, cattle ranchers, and veterinarians. Nevertheless, the department of Agriculture removed funds for inspection of slaughterhouses.

Now the NY Times reports: Surge in Abandoned Horses Renews Debate Over Slaughterhouses .

"Emaciated horses eating bark off trees. Abandoned horses tied to telephone poles. Horses subsisting on feces, walking among carcasses.
As the economy continues to falter, law enforcement officers in Kentucky and throughout the country are seeing major increases in the number of unwanted and neglected horses, some abandoned on public land, others left to starve by their owners.
The situation has renewed the debate over whether reopening slaughterhouses in the United States — the last ones closed in 2007 — would help address the problem. Some states, Missouri, Montana and North and South Dakota, for example, are looking at ways to bring slaughterhouses back. "

Malls

Shops provide positive externalities to each other. Both stores and restaurants like to be where there is good foot traffic from other restaurants and stores, and some stores like to cluster together (jewelers, and automobile dealers) to draw comparison shoppers who might not make the journey to a destination that had only a single shop. Part of the problem that towns face in nurturing thriving Main Street/downtown shopping districts is that it is hard to get the right mix when each commercial tenant negotiates separately with each landlord.

Malls--privately owned shopping centers--attempt to internalize this externality, and provide that right mix. (So, not all tenants of a mall have to pay the same rent per square foot; some tenants may provide traffic that raises the profitability of other tenants.) The marketplace designer is the mall owner, sometimes in negotiation with the tenants. (This is what led in Massachusetts to the Solomonaic judicial ruling that a burrito is not a sandwich, when Panera bread sued a mall claiming that the clause in its lease guaranteeing that it would be the mall's only sandwich shop was violated when the mall leased space to a burrito chain.

In the current recession, in which commercial real estate is hard to fill, malls are struggling to keep a mix of tenants who will draw traffic for each other: Malls Test Experimental Waters to Fill Vacancies . While some malls will fail, others may manage to bring new kinds of tenants (the article suggests wave machines and community colleges).

The stakes are high, since many malls are designed as easy-to-park-at destinations that must draw shoppers to them. If some shops go dark, malls will face the same kind of struggle as do less planned retail commercial neighborhoods.

Market for eggs and sperm

The Boston Globe reports Recession spurs egg and sperm donations
Giving provides extra income.

"Couples, and some single women, pay $20,000 to $30,000 for an egg donation, in vitro fertilization, and transfer to the recipient. Donors generally must be healthy nonsmokers between ages 21 and 32 with a good family health history, "reasonably educated and reasonably attractive," Benardo said. Screening involves physical, psychological, and genetic testing. If accepted, the woman undergoes hormone injections, then a surgical procedure to remove her eggs. Fees paid to the donor generally range from $5,000 to $10,000. Recipients choose prescreened donors."
...
"In Charlestown, NEEDS (National Exchange for Egg Donation and Surrogacy) also reports a 25 percent increase. "Very few of them will say just straight out it's for the money," said NEEDS manager Jan Lee. "They don't want to sound like a money-grabber. We ask them if they're applying because they need the money or out of the goodness of their heart, and they say both." "
...
"[Dr. Vito Cardone, founder of Cardone Reproductive Medicine & Infertility] cautions against women seeing this as a gold mine.
"The money that's given is limited; it's not going to be something to create a yearly revenue to get them through life," he said.
He believes in compensating women for their time and trouble but said there needs to be "some ethics to it" - both an altruistic motive and a monetary limit.
"When I see people who want to 'sell' their eggs for $20,000 or more it makes no sense, because then it becomes commercial, like selling any other thing," he said. "There has to be a little bit of kindness, because these couples have had a lot of hardship and desire a child very strongly." "
...
" Sperm donations are also on the increase, although they pay much less - an average of $85 to $100 per donation. Such "banks" generally require that the donor be at least 5-foot-8, a college student or graduate between the ages of 18 and 38, and in good health.
California Cryobank, which has offices in Cambridge, recruits largely on college campuses and asks each donor for a year's commitment, with the average donor contributing 2-3 times a week.
In the past six months, applications are up 20 percent, said Scott Brown, communications manager. "I think the recession has certainly opened up interest," he said. But less than 1 percent of applicants are chosen, based on family history, a physical exam, and analyses of blood, urine, and semen. "It's tougher to get into the Cryobank than into Harvard," Brown said."

Repugnant transactions: cartoon edition

Prophet Muhammad Cartoon Goes on Sale in Denmark

"A Danish press freedom group said Wednesday it is selling copies of a cartoon of the Prophet Muhammad that caused outrage across the Muslim World.
Some 1,000 printed reproductions of a drawing depicting Islam's prophet wearing a bomb-shaped turban are being sold for 1,400 kroner ($250) each, said Lars Hedegaard, chairman of the Danish Free Press Society.
...
Hedegaard said Danish artist Kurt Westergaard, who drew the cartoon in 2005, had given the society permission to produce the copies and sell them. Each numbered copy has been signed by Westergaard, Hedegaard said.
...
Westergaard has been living under police protection since an alleged plot to murder him was discovered last year.
Twelve cartoons depicting the prophet, including the one by Westergaard, were published in the Jyllands-Posten newspaper in 2005.
The following year, they triggered massive protests from Morocco to Indonesia, with rioters torching Danish and other Western diplomatic missions. Some Muslim countries boycotted Danish products."

Same sex marriage in Iowa, and New England

Another legally banned transaction between two willing adults that some third parties find repugnant has fallen, this time in Iowa: Gay Marriages Expected to Begin in Iowa April 24.

The different roles of judges, politicians, and voters in this matter are interesting to consider.

"The Iowa Supreme Court on Friday unanimously upheld a lower-court ruling that rejected a state law restricting marriage to a union between a man and woman.
...
"Only Massachusetts and Connecticut currently permit same-sex marriage. For six months last year, California's high court allowed gay marriage before voters banned it in November."

In MA and CT also, the ban on same-sex marriage was ended by judges, not legislators or voters.

Now in Vermont, a legislature has moved: Vermont Legislature Makes Same-Sex Marriage Legal .

"The Vermont Legislature on Tuesday overrode Gov. Jim Douglas’s veto of a bill allowing gay couples to marry, mustering one more vote than needed to preserve the measure.
The step makes Vermont the first state to allow same-sex marriage through legislative action instead of a court ruling. The law goes into effect Sept. 1."

The NYC high school match, continued

When I recently blogged about The NYC High School Match, I focused on the many students who received one of their choices. As I mentioned, "The NYCDOE reports that of 86,000 students looking to enter the 9th grade, 44,012 students received their first choice school, and 7,455 could not be assigned to any of their (up to 12) choices."

Those unmatched students will now go through a supplementary match process. Many of them likely ranked many fewer than 12 choices, and will now have to select among schools that still have vacancies. Needless to say, this is a serious setback for some of them. (Here's a story from the Daily News: Parents fume as kids miss cut for top city high schools).

Michael Hickins, a reporter from Information Week (who writes that his daughter just went through the process) was referred to me by the NYCDOE, because of the work I did to help design the process, along with my colleagues Atila Abdulkadiroglu and Parag Pathak. Here is how our conversation (and others he had) is reflected in his report: NYC Board Of Ed's Algorithm Not Academic.

Helping kids get into good schools is one of the most important things we can do for them, and this is why it's important for schools to use modern matching technology, as NYC does, to try to get as many kids well matched as possible. It's agonizing that we can't provide enough great school places for everyone. There's only so much that can be done with matching technology, which can allocate existing places, but doesn't create good new schools. School systems need our support in other ways as well.

Markets for organs

In Reward Organ Donors , Sally Satel writes in the Asian WSJ about the recent changes in Singapore law regarding compensation for donors (see my previous posts here and here). She goes on to outline the design of the kind of market she would like to see, and ways in which perceived repugnance might be addressed.

"My colleagues and I suggest a system in which a donor can accept a reward for saving the life of a stranger. A third party (the government, a charity or insurer) would provide the benefit and newly available organs would be distributed to the next in line -- not just to the wealthy. Donors would be carefully screened for physical and emotional impediments to safe donation, as is currently done for all volunteer living kidney donors. Moreover, they would be guaranteed follow-up medical care for any complications.
Many people are uneasy about offering lump-sum cash payments. A solution is to provide in-kind rewards, such as a down payment on a house, a contribution to a retirement fund or lifetime health insurance, so the program would not be attractive to people who might otherwise rush to donate on the promise of a large sum of instant cash.
Not only will more lives be saved through legal means of donor rewards, but fewer people will haunt the black-market organ bazaars of places like China, Pakistan, Egypt, Colombia and Eastern Europe. The World Health Organization estimates that 5% to 10% of all transplants performed annually -- perhaps 63,000 in all -- take place in these clinical netherworlds."

Kidney donors (and advertising)

Several recent stories about kidney transplants are worth noting, not least for their focus on donors: how to find one, how their gifts are effectively used, and how they are and might be compensated. (This leads to some thoughts on the various roles that advertising, through personal communication, news stories, and commercially, might play at various points).

At Salon, Whaddaya have to do to get a kidney around here? Frances Kissling writes about the gratifying responses she received when she carefully let her friends know that she was in need of a kidney transplant. She writes:
"I think I instinctively knew what I had to do. I'd spent a lot of my time raising money, and I had that Bible verse "ask and you shall receive" burned into my consciousness. I decided to compose an e-mail about my need. In it, I shared my sense of the adventure before me and asked if anyone would like to give me one of their kidneys. I noted: "To be dependent on the generosity of others is a new experience for me and I am thinking a lot about what it means to share one's body with another person. Also trying to figure out how I ask for a gift that I really want without expectation or making friends and colleagues uncomfortable." "

About the ongoing discussion of providing compensation for donors, whe writes
"Even without incentives, no group of do-gooders is treated with more suspicion by the medical community than living organ donors. Even a free glass of orange juice or an unnecessary lollipop given to a donor is interpreted by some leaders in the field as a "bribe" or a crime. Appropriate concern for the international organ trafficking problem (WHO estimates that the annual total of internationally trafficked kidneys is about 6,000) has so distorted the concept of altruism and eroded the principle of mutual respect that potential kidney donors are denied the basic safety net that a just and giving society should provide people who offer to risk their own lives to save the lives of others. And let's be clear. The best way to stop first-world people with money from exploiting poor people by bargain basement organ trafficking is to procure more organs from well-informed, healthy and autonomous people in the first world."

Among her bottom lines: if you need a kidney, let your friends know.

From Australia, Kidney Exchange is making continued progress: the news story Chain of goodwill saves lives reports that Western Australia's Paired Kidney Exchange Program has performed an altruistic donor chain, involving three transplants. As the technology progresses for effectively using altruistic kidney donations to enable multiple transplants, the benefits of such donations increase. And as the news of this spreads, it is likely more altruists will be moved to donate.

This brings me to the subject of advertising.

Apart from letting their friends and acquaintances know (and sometimes in preference to doing that) people in need of transplants sometimes advertise (see e.g. the story Ads, Billboard Plead for Organ Donations, or the site MatchingDonors.com).

In a column in the Los Angeles Times about how all sorts of transactions (particularly on the web) are funded these days by advertising, Joshua Gans is interviewed on the subject of repugnant transactions
"According to Joshua Gans, an economist at Melbourne Business School in Australia..., there's a social norm against repugnant transactions, such as paying for a kidney. In the last few years, too many transactions have become repugnant. "And if you need to make money to pay for the content ... and you can't get the consumers to pay, what do you do? Sell a related product, advertising," Gans told me. The good news is that at this point, I'm pretty sure The Times' sales staff will sell space on their kidneys."

Could someone actually finance a kidney donation by advertising? Jeff Ely at Cheap Talk offers this suggestion under the heading Organs for Money:
" I wonder if the following transaction would be considered taboo. I need a kidney, you have a spare. By law, I cannot pay you for the kidney and you would not give it to me without compensation. So instead I buy five minutes of primetime network TV air, say in the middle of American Idol, to broadcast my documentary about you telling the world what a heroic human being you are, how you saved my life and where to send you donations."

(In the nothing is too bizarre to contemplate category, Tyler Cowen at Marginal Revolution points to a laptop company that offers to help defray the cost of well attended funerals in return for being allowed to advertise at them: Advertising markets in everything)

HT to Lauren Merrill for the Salon story.

More on recommender systems for escorts

Scott Cunningham of Baylor writes:

"I saw today your post on the screening sites that prostitutes use ["Problem customer" registries for prostitutes]. I just wanted to pass along to you a paper I'm currently working on with Todd Kendall called "Prostitution 2.0: Estimating the Effect of the Internet on the Market for Commercial Sex in the US."
http://business.baylor.edu/scott_cunningham/Research_files/pro20-4.pdf
"We have been surveying online prostitutes for the last 10 months using data collected from The Erotic Review, which is a large "mall" that clients use to record detailed information about prostitutes in various cities. In the course of the surveys, we have been studying the way in which the Internet has facilitated improved screening, and even in some cases, signaling between clients and prostitutes. One of the more ingenious things that we have found is a case of signaling from clients to prostitutes wherein they send letters of recommendation to prostitutes, usually in the form of sending along information [from] another prostitute with whom they've already visited. This, we argue, has enabled prostitutes to update their beliefs that a new client is not a cop (or a violent client) because these letters are relatively more expensive for cops to send. A case in point - see this story about two police officers who were sleeping with prostitutes in Beaumont, Texas allegedly in order to make a case on a drug trafficker. When the public learned, the men were fired, and the officers are now suing the Beaumont, Texas police department for wrongful termination. (It's suggestive that indeed the private costs of using these kinds of methods are prohibitively high for cops, which we argue is evidence that the costs of signaling type to prostitutes is such that the separating equilibria and not the pooling equilibria is more likely to be happening). "

Here is The Erotic Review, and here is what they say about customers getting recommendations from escorts:

"TER White List
If you have a good reputation with the ladies, encourage them to visit the TER White List and submit a referral for you. The TER White List is an easy way for providers to give positive references about members they have seen. "

The NYC High School Match

The New York City Department of Education reports that the new high school match process continues to work well: More Than 80 Percent of Students Admitted to a Top Choice High School for Fourth Consecutive Year.


"The Department of Education conducts extensive outreach to families about the high school admissions process, beginning during the sixth grade. High school applicants receive the annual, 500-page High School Directory, which provides them with information about every high school. They also receive several other publications that guide them through the admissions process. In addition, the Department of Education hosts Citywide high school fairs, workshops, and information sessions for several months before students’ applications are due. Middle and high school administrators, guidance counselors, parent coordinators, and community partners help students and families evaluate their options and make informed choices.

"Students can list up to twelve high school programs on their applications in order of preference. Schools also rank students. Then, students are matched to the school they ranked highest that also ranked them. The admission process consists of three rounds: the first round for students applying to the City’s Specialized High Schools, the main round (this round), and the supplementary round for students not matched during the main round. "


The NYCDOE reports that of 86,000 students looking to enter the 9th grade, 44,012 students received their first choice school, and 7,455 could not be assigned to any of their (up to 12) choices.(The figures they give are for what we called rounds 1 and 2 of the new system, described in our paper discussed in a previous post, Matching students to high schools in NYC . The unmatched students will next be informed of the schools that still have vacancies, and be asked for a new preference list of up to 12 choices. Here's a link to the paper again: 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. )

Repugnance, and regulation of new markets: surrogate wombs

One of the reasons that people are reluctant to consider legalizing markets for new and possibly repugnant transactions is that it is easy to imagine that bad things can happen in new markets. (Credit default swaps, anyone?). The question of whether it should be legal to buy and sell kidneys for transplantation is the example I've most frequently written about.

But now comes a story about the market for surrogate wombs. A company that did the matchmaking between infertile couples and surrogate moms, and had the couples set up escrow accounts to make guaranteed payments to the surrogate mom over the course of the pregnancy, has collapsed, and the funds with which it was entrusted have disappeared. Here's the story in Slate: If you stop paying a surrogate mother, what happens to the fetus?

"That's the scenario unfolding in California. The victims are couples and surrogates who met through SurroGenesis, a company "dedicated to assisting infertile couples to have a baby through third-party assisted reproduction." Hiring a surrogate through the company is expensive, as you'll see from its long list of fees. But don't worry: The company offers to "arrange for opening of [a] trust account" that will cover your expenses. Specifically, according to the Los Angeles Times, its clients say "SurroGenesis recommended that prospective parents set up trust funds administered by the Michael Charles group," its partner company.
The parents handed over the money. From this, the companies were supposed to pay the surrogates. Now, the Times reports, payments have stopped. In fact, the New York Times adds, "SurroGenesis told clients on March 13 via e-mail that their money was gone. Lawyers say that as much as $2 million may be missing, with some couples losing as much as $90,000."
...
"Surrogates aren't mercenaries. But they do need to be paid for their sacrifices. With every week that passes, they endure more of pregnancy's burdens. They submit to exams, tests, and other procedures. They take on serious medical risks. They forgo activities that might harm the fetus. They lose the ability to commute to and work at other jobs. They have bills to pay. At least one abandoned surrogate says she has received an eviction notice.
"If you stop paying your surrogate, she needs to quit and find another job, just like any other worker. But surrogacy isn't like any other job. The only way to quit a pregnancy is to abort it."

So, we've got a very bad market failure here. Either surrogacy needs to be better regulated, or private institutions have to emerge that will provide more security for these difficult transactions.

Is this kind of failure a reason to make surrogacy illegal? I think that would be way premature; I'm guessing there are happy children being brought up in loving families, borne by surrogates who feel well compensated. But it does mean that, when we debate whether to legalize selling kidneys, for example, the "market design" questions of how any such market might be regulated, and whether the worst failures could reliably be avoided, should be at the center of the discussion.

HT (and congratulations) to Steve Leider (who just took a job at Michigan)

In MA, proposed law makes 60 _obscenely_ old

Eugene Volokh reports Proposed Ban on Making and Distributing Pornography Involving >60-Year-Olds and the Disabled (Including Spouses or Lovers Consensually Photographing Each Other):
"Yup, the law (in Massachusetts) would make it a very serious crime — tantamount to child pornography — to make, and distribute "with lascivious intent," "any visual material that contains a representation or reproduction of any posture or exhibition in a state of nudity" involving anyone age 60 or over, or anyone who has "a permanent or long-term physical or mental impairment that prevents or restricts the individual’s ability to provide for his or her own care or protection."
..."The bill text is here; the provisions that would be amended are here and here; and the definitions of "elder" (anyone age 60 or older) and "person with a disability" ("a person with ) are here. "

HT: Steve Leider

A no-longer repugnant marriage transaction?

The Telegraph reports: Gordon Brown has opened talks with Buckingham Palace on removing the 308-year-old law which bars members of the Royal Family from marrying Roman Catholics.

"Monarchs and members of their family in the order of succession have been banned from marrying Roman Catholics since the Glorious Revolution of 1688, when the Catholic James II was overthrown in favour of the Protestant William of Orange. The prohibition is enshrined in the Bill of Rights passed that year, and the 1701 Act of Settlement.
Rewriting the Act of Settlement requires the consent of all 53 Commonwealth countries, and Mr Brown hopes to discuss the proposal at the Commonwealth summit in November. He has already held private talks about his plans with some Commonwealth leaders.
Sources close to the Prime Minister stressed that the plans would not undermine the Establishment of the Church of England, and that the monarch would retain the role of head of the Church."
...
"During the current Queen's reign, two members of the Royal Family - Prince Michael of Kent and the Earl of St Andrews - renounced their rights of succession after marrying Roman Catholics. Last year, it was announced that Autumn Kelly had renounced her Catholic faith before she was able to marry Mr Phillips."

"Dr Harris said of his Bill: "The Bill will remove the uniquely discriminatory stipulation which currently exists - that an individual in the line of succession to the throne can have a civil partnership with a Catholic, can marry a Muslim or atheist, but can not marry a Catholic."