Roger Myerson and Paul Romer on designing nations and cities

Two emininent economists have been thinking about design on the largest of scales.

Roger Myerson thinks about nation building in general, and Iraq in particular, and reflects on the role of political leaders' reputations, for patronage among other things.

Paul Romer thinks about macro-market-design in the form of new "charter cities," to be modeled roughly on Hong Kong.

Here is Roger, in "A Field Manual for the Cradle of Civilization:Theory of Leadership and Lessons of Iraq, " Journal of Conflict ResolutionVolume 53 Number 3 June 2009 470-482. (HT Paul Milgrom)

"Agency incentive problems in government make patronage an essential aspect of statebuilding, and political leaders become fundamentally constrained by their reputations. Democratic competition requires many leaders to develop independent reputations for exercising power and patronage responsibly, which can be encouraged by political decentralization."

Roger then recounts Xenophon's description of the rise of Cyrus (Koresh), the Persian leader.

"The key to Cyrus’s success was his apparent love of justice, which was inculcated by his education and which enabled him to earn the trust and loyalty of a great army. But what kind of justice was it that Cyrus loved so much? It was certainly not justice for poor peasants, whose crops were gathered to support his conquering forces.
What Cyrus loved was justice for the soldiers who served his cause. Apparently Cyrus’s greatest pleasure in life was to judge the valor of troops in battle and to reward them richly for their accomplishments, asking nothing for himself. As a mechanic knows the names of his tools, Cyrus learned the names of all the captains in his army, so that each could be confident of his service being remembered. When everybody recognized Cyrus as the best leader to distribute their booty after a victory, he could take power, first over the multinational coalitional forces and, ultimately, over Asia."


Paul Romer, explains the idea of charter cities here, and in a Q&A at Freakonomics, here: Can “Charter Cities” Change the World? A Q&A With Paul Romer

He argues that to credibly move to better rules, you might have to do some things all at once and start fresh. (He suggests a good place to start would be to have a new Cuban city administered by Canada at Guantanamo Bay, to try to recreate the experience of Hong Kong.)

He too isn't afraid to think big:

"Q. It all sounds great as a theoretical exercise, but honestly, don’t your colleagues tell you that something like this will never happen?

A. They do say this, which is actually kind of ironic when you line it up with the other things they say. They recognize that the construct of a charter city is something that could make everyone better off. They admit that there is no technological or economic constraint that keeps us from building many of these. Then they say that for political reasons, it will never happen. They tell me that you can’t change politics; you can’t overcome nationalism; there is no way for countries to work together to extend the reach of good rules. Then these same economists suggest that we should just stick to business as usual. We should offer conventional economic advice and assume that political systems will naturally follow our advice when we point to something that could make everyone better off. But of course, they have already revealed that they don’t believe this. What’s going on here is a kind of self-censoring. Economists seem to think that we should propose things that are acceptable and that political systems will pursue, but that we should avoid proposing or even discussing things that are controversial or politically incorrect. I think we’d do our jobs better if we just said what’s true without trying to be amateur politicians. "

Romer and Myerson seem to have different views of where economics ends and politics begins.

Does a decrease in the number of traffic fatalities increase live kidney donation?

Over at Economic Logic, the Economic Logician reviews an article, The Effect of Traffic Safety Laws and Obesity Rates on Living Organ Donations by Jose Fernandez and Lisa Stohr. It finds that a decrease in availability of deceased donor organs (through an increase in helmet and seatbelt laws) elicits some increase in live donor kidney donation.

Here's the abstract, followed by EL's summary.

Abstract: This paper uses variation in traffic safety laws and obesity rates to identify substitution patterns between living and cadaveric kidney donors. Using panel data from 1988-2008, we find that a 1% decrease in the supply of cadaveric donors per 100,000 increases the supply of living donors per 100,000 by .7%. With respect to traffic safety laws, a national adoption of partial helmet laws is estimated to decrease cadaveric donors by 6%, but leads to a 4.2% increase in the number of living donors, or a net effect of 1.8% decrease in the supply of kidney donations. The recent rise in obesity rates is estimated to increase living donor rates by roughly 18%. Lastly, we find evidence that increases in disposable income per capita is associated with an increase in the number of non-biological living donors within a state, but is not found to have an effect on biological donor rates.

And here is EL's summary:

"There are times where you really wonder why authors would even think that some variables could be correlated and how they then come up with a story that can explain this statistical relationship coming from seemingly nowhere. The paper by Jose Fernandez and Lisa Stohr is one of these.To quote their abstract, "this paper uses variation in traffic safety laws and obesity rates to identify substitution patterns between living and cadaveric kidney donors." Despite reading this sentence ten times, I could not make any theoretical sense of it. But reading through the paper, a good story can be made. Tightening traffic safety laws reduces the number of fatalities, and thus the number of cadaveric organ donors. An increase in obesity increases the demand for organs, in particular kidneys. Thus one can instrument for supply and demand using these measures. With this in mond, one can then study how variations in the supply of supply of cadaveric organs (which are of poor value) and demand can motivate living donors to come forward, as they trade off the usefulness of their donation with the personal harm it will inflict upon them. Fernandez and Stohr fiand that donors respond indeed to cadaveric supply and to the increase in demand due to obesity."

Markets for body parts, continued

While it's illegal to buy or sell organs for treatment, there's a legal market for "tissues" such as bone. But it's still fenced in with lots of repugnance. As with solid organs, the issue of "objectification" (or "commodification") of the body is a big issue, which bears on who may be compensated for what, among other things..

Inside a Creepy Global Body Parts Business

"According to the American Academy of Orthopedic Surgeons, more than a million bone parts are used in transplants every year. In no other country is it possible to make so much money with body parts. If a body were disassembled into its individual parts, then processed and sold, the total proceeds could amount to $250,000 (€176,000). For a single corpse! The US tissue industry generates total revenues of about $1 billion a year, says journalist Martina Keller, a co-author of this article and the author of the German book, "Cannibalized: The Human Corpse as a Resource." "
...

"Should corpses be butchered to make cosmetic procedures possible? Ingrid Schneider is decidedly opposed to the practice. For the past 15 years the Hamburg political scientist, a former member of the Investigative Commission on Law and Ethics in Modern Medicine in the German parliament, has been involved in the subject of recycling body substances. Schneider argues that the body is not a source of raw materials that can be sold at will. Given such concerns, it is not surprising that many people are deeply opposed to allowing the body of a family member to be reused, even for medical purposes.
Even if it is unrealistic to expect that all commercialization of the body could be ruled out in modern medicine, says Schneider, it is important to set boundaries. For that reason, she insists that human tissue ought to be used sparingly -- that is, only when such use is medically necessary and clearly superior to other forms of treatment.
The conviction that the body is much more than an object has also shaped the policies of the World Health Organization (WHO), the European Parliament and the European Council, the EU's body representing the leaders and ministers of the 27-member bloc. All of these bodies condemn the practice of trading in human body parts to turn a profit.
In Germany, the country's organ transplant act regulates the removal of tissue. Only those who have consented to organ and tissue harvesting are considered as donors. If a person dies and is not already a donor, his or her closest relatives can consent to donation. Paragraph 17 of the transplant act explicitly states: "Trading in organs or tissue intended for use in the medical treatment of others is prohibited." Physicians who remove tissue can only be paid suitable compensation for their efforts. The law calls for prison sentences of up to five years for violation of the trading prohibition."

Right to die in England

There has been some interim resolution of the continued debate in England about whether those who assist a terminally ill relative who wishes to commit suicide, in particular by accompanying them to a clinic in Switzerland, will face prosecution. The current resolution is, it's still illegal, but guidelines have been issued to give some legal safety.
Campaigners win the fight to legalise assisted suicide
Assisted suicide investigations will focus on who stood to benefit

"People who stand to benefit financially from a person’s death are likely to be the ones prosecuted for assisting a suicide, under guidelines to be issued this week. "...

"The policy...will aim to clarify when individuals are more likely to be prosecuted or more likely not to be, he said.
Mr Starmer told the Andrew Marr Show on BBC One that such factors will include whether the person has a clear and settled intention to commit suicide, whether they have been encouraged or just assisted to do so, and whether those helping them have anything to gain from their death."

..."As many as 115 people from Britain have gone to Dignitas, the Swiss clinic, to die, but no one has been prosecuted so far. Last month Mr Starmer said that the landmark guidelines would apply in the UK as well as overseas.
Under current legislation, those who “aid, abet, counsel or procure” someone else’s suicide can be prosecuted and jailed for up to 14 years. Ms Purdy, from Undercliffe in Bradford, West Yorkshire, wants to know what would happen to her Cuban husband, Omar Puente, if he helped her to travel abroad to end her life. She took her case to the Lords after the High Court and Court of Appeal held that it was for Parliament, not the courts, to change the law.
The Lords agreed that changes were a matter for Parliament, but upheld Ms Purdy’s argument that the DPP should put in writing the factors he regarded as relevant in deciding whether or not to prosecute."

The guidelines, which were issued on schedule, drew a predictably wide range of reactions, some of which can be found at the end of this story in the Times: Assisted suicide guidelines do not give immunity against prosecution, says DPP

Right to die in Montana?

May a physician help a terminally ill patient commit suicide? Or is that a terminally repugnant transaction, which even a willing patient and physician should be prevented by law from completing?

The question has been raised in Montana, and will go to the state supreme court: Montana Court to Rule on Assisted Suicide Case

"Washington and Oregon allow physicians to help terminally ill people hasten their deaths, but in those states the laws were approved by voters in statewide referendums, and neither state’s highest court has examined the issue of a constitutional right to die.
In Montana, the question will be decided by the seven-member State Supreme Court. A lower-court judge ruled in Mr. Baxter’s favor last December — on the very day Mr. Baxter died — and the State of Montana appealed the ruling."
...
"“There are moral arguments, philosophical arguments on both sides, bioethical arguments on both sides, even medical and public health arguments on both sides,” Anthony Johnstone, the state solicitor at the Montana attorney general’s office, who will argue the case for the state, said in defense of current laws that prohibit physician-assisted death. "
...
"“This case is part of a journey,” said Ms. Tucker, who is director of legal affairs for Compassion and Choices, a national group that advocates to protect and expand the rights of the terminally ill and is also one of the plaintiffs. “It’s about empowering patients and giving them the right to decide when they have suffered enough.”"

Update: Dec 31, 2009. Montana Ruling Bolsters Doctor-Assisted Suicide
"The Montana Supreme Court ruled on Thursday that state law protects doctors in Montana from prosecution for helping terminally ill patients die. But the court, ruling with a narrow majority, sidestepped the larger landmark question of whether physician-assisted suicide is a right guaranteed under the state’s Constitution."

Right to wed in Vermont

Same-Sex Marriages Begin in Vermont


"Vermont is one of five states that now allow same-sex couples to marry. Massachusetts, Connecticut, New Hampshire and Iowa are the others.
Vermont, which invented civil unions in 2000 after a same-sex couple challenged the inequality of state marriage statutes, was a mecca for gay couples who to that point had no way to officially recognize their relationships.
Since then, other states have allowed gay marriage, as did Vermont, which in April became the first state to legalize gay marriage through a legislative decree and not a court case."


See my other posts on same sex marriage, and more generally on repugnant transactions, i.e. transactions that some people want to do but that others object to.

Egg "donation"

Do a google search for egg donor and and open a window on a thriving marketplace for human eggs, with well established companies such as Egg Donation, Inc. ("where dreams come true") competing with a host of others. The word "donor" is entirely vestigial in this context (as the "..., Inc.") makes clear, and the repugnance that used to accompany such sales is becoming vestigial as well.

The Minneapolis Star Tribune ran an interesting story about that firm some time ago, by Josephine Marcotty and Chen May Yee: Oct. 21, 2007: Miracles for sale.

The article describes the modern egg donor:

"The clinics want donors who have a healthy blend of altruistic and financial motives -- women who want to help infertile women but who are practical enough not to do it for free. "

Choosing sex of children: repugnant in Britain but not in U.S.

The Times reports: US clinic offers British couples the chance to choose the sex of their child

"A new clinic in Manhattan is appealing to British couples who want to pick the sex of their next child — a process that is banned in the United Kingdom.
Pre-implantation genetic diagnosis (PGD), which can reveal the sex of an embryo, is prohibited in Britain except when it is used to screen for genetic diseases.
The United States relaxed its regulations on sex selection in 2001 and American medical centres report interest from British patients who find out about their “family balancing” services through online advertisements. "
...
"As recent healthcare debates show, many Americans balk at government involvement in medicine. Robert Brzyski, chairman of the ethics committee at the American Society for Reproductive Medicine, said: “The tradition in the US has been to not interfere with the reproductive choices of American citizens.” "
...
"Although evidence suggests that British patients tend to pick sons and daughters in roughly even numbers, most US clinics will treat only those parents who already have a child of the other sex. "
...
"David Karabinus, a director at the Virginia institute, believes that elective sex selection will eventually be seen as just another form of reproductive medicine. “Just as there was an overreaction about IVF, there will be a gradual acceptance as we prove it’s safe. It’s there if people want it.” "

Living donor liver transplants

One of the reasons that kidney exchange is proving successful is that the dangers to donors seem to be quite low. In principle, liver exchange is also a possibility: a healthy donor can donate one lobe of his liver, and expect it to grow back. But a recent study of live-donor liver transplants at the pioneering University of Pittsburgh Medical Center reveals that the rate of complications for live liver donors may be quite high: UPMC liver transplant study finds flaws: Study reveals high rate of complications from UPMC procedures that used living donors .

"The study looked specifically at operations in which the larger, right lobe of the donor's liver was removed, and said that "no matter how carefully right lobar [living donor liver transplant] is applied, the historical verdict on the ethics of this procedure may be harsh. There is no precedent of a surgical procedure that exposes healthy persons to such a high risk on behalf of others."
While all 121 liver donors were still alive at the time the study was written, more than 10 percent of them also suffered serious postoperative complications.
The study also concluded that while some people argue that living donor transplants keep recipients from becoming critically ill while waiting for an organ, "in a reversal of fortune," 11 of the 121 recipients became so sick after their initial transplants that they had to get second livers from deceased donors. Only five of the 11 were still alive at the time the study was written."

The article also offers a window on the complicated decisions facing transplant surgeons generally (and not just liver transplant surgeons) about which patients should be offered a transplant. The news story quotes one doctor summarizing the issue as follows:

""I think the study's authors are ...also are bringing out the whole issue that we need to be careful and not just charge ahead and let cowboys do this procedure" "

Kidney Exchange and Nurse Coordinators

Lots of people play critical roles in making kidney exchange a reality, and a recent article emphasizes the enormous role played by nurse coordinators: Nurses: Kidney Exchange Registries Increase Compatability, Hope:

"Nurses Make It Happen: The foundation for these exchange programs is collaboration among transplant centers and the cornerstone is the nurse coordinator at each facility. These nurses are in frequent contact and are negotiating solutions as problems occur. They coordinate schedules and shipping arrangements to get the kidneys where they are needed in the shortest possible time. “We often ship the kidney to the recipient because it can be hard for donors to travel,” Charlton says. “There are times the donor is in California and the recipient is on the East Coast. The coordination among transplant centers is a massive undertaking.”Morgievich and Charlton agree the nurses who coordinate the exchanges are the driving force that makes the whole complex machine run. Larger transplant centers are the major players because they have the expertise and resources to be innovative about approaches to exchanges. Operating room schedules have to be coordinated, and detailed logistical communication schedules are set up across miles and time zones, so that as the living donor kidneys are removed and prepared for transport across the hall or across the continent, the recipient is ready. Although the surgical procedure is similar in every case, surgeons share details about the anatomy of the organ with the receiving surgical team. "

"Morgievich notes that if anyone entered “kidney exchange” into an Internet search engine five years ago, they would have had negligible results. A Google search today produced 1.2 million results in less than a second.“This is a whole new ball game, and we’ve had to create new ways to look at sharing best practices. We’ve even had to create a language for the way it works,” she says. “When we have paired donor and recipients combined with an altruistic donor, we usually have a donor at the end of the chain. We sometimes hold that donor over or find an appropriate recipient from the wait list. That last donor in the chain is called a ‘bridge donor’ because sometimes they wait until we can organize another series of exchanges. They are the bridge to the new chain.” "

Here's the google search for kidney exchange, and here are my previous blog posts with kidney exchange as a tag.

The kidney supply chain

The Minneapolis Star Tribune has given its health reporter Josephine Marcotty unusual scope to write about kidney transplantation in a multi-part series on kidney failure, treatment, and transplantation, and she has done them proud.

Part 1: 'Survival of the savviest' explored the challenges of being on dialysis, waiting for a deceased donor, and looking for a live one.

"But the two supply systems -- living and deceased -- remain radically different. Organs from deceased donors are viewed as a public asset -- like national parks -- and their allocation is highly regulated for fairness and transparency. There are disparities in who earns a spot on the deceased donation list, but they are generally viewed as a consequence of inequities in the overall health care system. A living donation, on the other hand, is a private gift from one person to another. Except for a federal law that makes selling organs a felony, there is no oversight and no support for living donation by the government or the transplant community. As a consequence, finding a living donor is often a matter of wealth, social advantage -- or pure luck."

Part 2: Balancing life and death looks at the process by which willing live kidney donors are accepted or rejected, a process that involves both whether their kidney is compatible with their intended recipient, and their own health. The story says that the first undirected living donor was accepted in Minnesota. More generally,

"Competition between transplant centers is fierce. Minnesota, for example, has four hospitals that compete for kidney patients and organs. If one transplant center changes its standards, sooner or later the others often follow. One reason is that everyone, except perhaps the living donor, benefits. Patients fare better because kidneys from living people tend to be better quality than those from the deceased. The doctors have more control over the complex surgeries. Hospitals, for their part, make more money. Medicare pays an average of $106,000 for a transplant, regardless of whether the kidney comes from a living or deceased donor. And living donor transplants generally cost less -- about 15 to 20 percent less at the university hospital, for example. That means the hospital stands to make 15 to 20 percent more per surgery."... "Nevertheless, taking a kidney from a living person presents daunting ethical questions. In the early days of transplant medicine, things were simpler. Only genetically related relatives were accepted as donors. But family dynamics are complex; doctors and hospital social workers sometimes had to find ways to say "no'' on behalf of reluctant relatives who couldn't find the courage to say no themselves. "There's much more coercion in families than outside of families," said Dr. Stephen Textor, a kidney specialist at the Mayo Clinic. In other cases, saying no was next to impossible. "The people who really pushed it? Spouses," Garvey said. "You have your husband sitting in front of you, dying. They were telling us, 'Who are you to tell me I can't be a donor?' They were right." "

Kidney failure, Part 3: A revolution: trading donors is the installment that first caught my eye, as it deals with kidney exchange. Marcotty reports on what must have been some long interviews with Mike Rees, the surgeon responsible for many of the most important innovations in kidney exchange.
The article begins with this subheadline:
"Kidney exchanges use the oldest economic model of all - trade. Computer matching can start a chain of transplants, but the idea has a long way to go."

I even make a cameo appearance in her story, where I often am, on the phone:
"Then in December 2006, Rees spent an hour-and-a-half on the phone with Alvin Roth, a Harvard economist who specializes in matching theory.
Roth has devised many matching programs, including the national system that fits medical students with specialty training centers.
He also studies what has been jokingly described as "ick-onomics" -- the economics of repugnance. For instance, most people abhor the idea of selling human body parts for transplant. But trade? That doesn't usually trigger the same kind of visceral reaction, he said."

Marcotty describes how Rees initiated the first non-simultaneous chain, through the words of the altruistic donor, Matt Jones, who started it off.

"It began with Matt Jones, a 30-year-old father of five who worked for Enterprise car rental in Petoskey, Mich. He was determined to give his kidney to anyone who needed it.
His first attempt to donate fell apart when the patient unexpectedly got a kidney from the deceased list. But after putting time and money into travel and testing, and persuading his fiancé at the time that it was a good idea, he wasn't about to give up. He called Rees.
"He tells me, 'I have this idea of doing a chain,'" Jones said in an interview. "'It's never been done. There are some people who think I'm crazy.'
"I said, 'Sounds like a great idea.' "

(Mike spends a lot of time on the phone too:)

(Here's my earlier post about that first non-simultaneous chain.)

Marcotty continues the story of non-simultaneous chains: "In March, Rees described his chain in a New England Journal of Medicine article titled "A nonsimultaneous, extended, altruistic-donor chain.... The number of transplants from swaps and chains is growing exponentially. In July, an eight-way multi-hospital series of transplants was conducted in four states over three weeks. In March, a series of six transplants was conducted at three hospitals around New York in 36 hours.
In Boston last spring, kidney exchanges were one of the hottest topics at the American Transplant Congress, a major international conference. Hundreds of surgeons, nurses and social workers absorbed PowerPoint slides that illustrated intricate webs of matches by race, age, medical condition, genetics and blood type. Instead of presentations on anti-rejection drugs, they learned about software programs."

Part 4: The ethics of kidney donation: Two views

The two views are pro and con on whether compensation for donors would improve the supply of donor kidneys, or whether this is too repugnant to contemplate. The pro position is taken by Dr. Arthur Matas, an eminent surgeon and former president of the American Transplant Society. His bottom line:

"It is immoral to stand by and watch patients die when we have the means to save them. A regulated system of compensation for donation has the potential of saving lives, shortening the waiting list and improving transplant outcomes. A regulated system protects the interests of donors. Unless Congress lifts the ban against compensation and allows pilot programs, we are guaranteed more needless death and suffering."

The con position is taken by Jeffrey Kahn, a bioethicist. His bottom line:

"Organ donation has always relied on the altruism of donors and their loved ones, with the hope that any risk for the patient is balanced by the benefit of the good deed. But most people have a price at which they might ignore whatever qualms they have about donation and become willing sellers. That changes the relationship -- from giving a gift to being paid enough to ignore the risk.
A market allows this shift, and it is a change we should be loath to accept."

Declaration of Istanbul update

I received an email regarding the 2008 Declaration of Istanbul, intended to slow/halt/reverse transplant tourism and black markets for organs. It states in part:

"On September 30, 2009, the Steering Committee of the Declaration of Istanbul met in Beirut, Lebanon, in conjunction with the Congress of the Asian Society of Transplantation, to formulate a strategy and plans for the continued implemention of the Declaration."

"Updates:
· Since the November 2008 Steering Committee meeting, there has been a reduction in organ trafficking and transplant tourism in China, the Philippines, and Pakistan. Israel has enacted legislation that impedes Israeli citizens from receiving insurance coverage for transplants performed outside of Isreal if the destination country prohibits foreign patients from undergoing transplantation. There has been a recorded reduction in foreign transplants in Colombia from 12 % to 1 % of transplants performed.

· More than 80 professional organizations and societies have endorsed the Declaration of Istanbul.

· On October 13, 2009 a Joint Report by the Council of Europe and the United Nations will be presented in New York at the United Nations to launch a global effort in combating human organ trafficking.

· In March 2010, the WHO will hold its 3rd Global Consultation on transplantation in Madrid, Spain (in collaboration with TTS and ONT) to foster the development of self sufficiency in each nation in providing organ transplants for its residents. "

"Mission Statement:
The Mission of the Declaration of Istanbul Custodian Group (DICG) is to promote, implement and uphold the Declaration of Istanbul so as to combat organ trafficking, transplant tourism and transplant commercialism and to encourage adoption of effective and ethical transplantation practices around the world. "


"The following GOALS have been identified for these revised Task Forces:

I. Professional Organizations:
· Professional Organizations require that speakers at scientific and educational meetings on clinical organ transplantation disclose whether the clinical and research activities being reported have complied with the Principles of the Declaration of Istanbul.
· Professional Organizations have an established mechanism for determining the appropriateness of accepting presentations on clinical organ transplantation based on the disclosure of their compliance with the Principles of the Declaration of Istanbul.
· Organizations that endorse the Declaration of Istanbul establish mechanisms to promote, implement and uphold the Declaration (for example, through their ethics committees, awards and membership criteria).

II. Medical and Scientific Journals:
Medical and scientific journals require that authors of articles relating to clinical organ transplantation disclose whether the clinical and research activities being reported have complied with the Principles of the Declaration of Istanbul.
Medical and scientific journals have an established mechanism for determining the appropriateness of accepting presentations on clinical organ transplantation based on the disclosure of their compliance with the Principles of the Declaration of Istanbul.

III. Pharmaceutical Companies and Other Research Sponsors:
· Pharmaceutical companies establish a mechanism to ensure that the clinical studies of organ transplantation they support comply with the Principles of the Declaration of Istanbul.
· Pharmaceutical companies disclose whether the clinical studies of organ transplantation they support comply with the Principles of the Declaration of Istanbul.
· All organizations and individuals that fund clinical studies of organ transplantation establish a mechanism to ensure that these studies comply with the Principles of the Declaration of Istanbul.
· All organizations and individuals that fund clinical studies of organ transplantation disclose whether these studies comply with the Principles of the Declaration of Istanbul.

IV. Violations of the Declaration:
· Violations of the Principles of the Declaration are drawn to the attention of relevant healthcare authorities and institutions and medical societies as well as to the World Health Organization and other relevant intergovernmental organizations.

V. Government and Healthcare Institutions:
· Governments and responsible national authorities adopt and implement policies, laws and regulations in accordance with the Principles of the Declaration of Istanbul and the WHO Guiding Principles on Human Cell, Tissue and Organ Transplantation.
· Hospitals and other healthcare institutions engaged in organ transplantation services adopt and implement policies in accordance with the Principles of the Declaration.
· National and institutional ethics committees develop policies concerning organ transplantation which are in accordance with the Principles of the Declaration."

In related news, the United Nations and the Council of Europe have launched a study on "Trafficking in organs, tissues and cells and trafficking in human beings for the purpose of the removal of organs". (Here's a brief news report.)

Peter Singer on compensating kidney donors

Kidneys for Sale? by Peter Singer

The distinguished Princeton philosopher of bioethics takes a nuanced view of the matter of compensation for donors, in a discussion of organ sales that touches on New York, Singapore, and Iran.

HT: Joshua Gans

31 States have laws against price gouging

So reports Michael Giberson at KP, based on a Master's thesis by Cale Wren Davis, supervised by Randy Rucker at Montana State. The thesis is here: AN ANALYSIS OF THE ENACTMENT OF ANTI-PRICE GOUGING LAWS.

I'm struck by how relatively recent anti price gouging laws are: 27 of the 31 were passed in the 1990s or 2000s, with the rest passed in 1979 (NY), 1983 (HI), 1986 (CT), and 1986 (MS).

The laws come into force when some kind of state of emergency has been declared, and most set a price ceiling at "pre-emergency prices," although some set a ceiling higher than that, the highest being 25% above pre-emergency prices.

"No Toilet, No Bride" in rural India

Emily Wax at the Washington Post reports on some consequences of the increased education and economic power of rural Indian women: In India, New Seat of Power for Women. Prospective Brides Demand Sought-After Commodity: A Toilet.

"About 665 million people in India -- about half the population -- lack access to latrines. But since a "No Toilet, No Bride" campaign started about two years ago, 1.4 million toilets have been built here in the northern state of Haryana, some with government funds, according to the state's health department.
Women's rights activists call the program a revolution as it spreads across India's vast and largely impoverished rural areas.
"I won't let my daughter near a boy who doesn't have a latrine," said Usha Pagdi, who made sure that daughter Vimlas Sasva, 18, finished high school and took courses in electronics at a technical school.
"No loo? No 'I do,' " Vimlas said, laughing as she repeated a radio jingle. "

Harvard's financial report

Here's a link to the Harvard University Financial Report for fiscal year 2009.

Simultaneous offers in a computer science search at Harvard

Michael Mitzenmacher writes about some job searches in computer science, including one that he chaired that was able to make 6 simultaneous offers, and ended up hiring 3 people. He argues that making simultaneous offers sends a signal. (It is certainly a signal about the support the university is offering to the department, and the direction that it is taking...)

"in our last search (which I was leading), where we ended up making 6 offers (and got 3 acceptances). We (the hiring committee) recognized that we were making a rather significant request to have 6 simultaneous outstanding offers. We also recognized the dangers in trying to sequentialize these offers. First, there was the internal danger -- the complex discussions (we had such a great committee, we wouldn't have argued) we would have had to undertake to rank-order everyone we wanted to make an offer to. And second, there's the external danger that the candidate -- who will, of course, find out they were the "second choice" -- takes the ordering as a negative signal and becomes more inclined to take another offer. One can argue whether or not a candidate should take such an ordering as a signal, or whether such a reaction is a purely emotional response. (See Mihai's post, for example, and judge for yourself in that case.) But it was clear to us that, even if no such signal was intended, there was a high risk that would be the interpretation from the standpoint of the candidate.Mihai's post provides a solid empirical data point that we were right to have this concern; it's something I will keep in mind (and if necessary point to) in future hiring discussions. I'm glad we were able to make 6 simultaneous offers, and give all of the candidates we made offers to the right signal."

HT: Itai Ashlagi, who is on the job market this year

Interviewing for the medical match

A recent article* in the Journal of the American Medical Association talks about the strategic behavior that precedes the submission of rank order preference lists to the medical match. The author was a student member of the NRMP board of directors who then participated in the match, and he describes the ways in which residency directors skirted the Match rules against soliciting information or commitments about how students would rank them. He also describes the kinds of signaling and information exchange that might not be unusual in other job markets, but which might have less consequence than in a centralized clearinghouse.

"I was startled when my first interview with an assistant program director abruptly turned from an easygoing chat to an unfriendly challenge:“Why would you ever come here?” Throughout the rest of the season, other interviewers often pushed the MPA’s boundaries, asking me,“How seriously are you considering our program?” or similar questions. Such inquiries are not violations, strictly speaking, but they still suggested that I had to make a commitment to be competitive. Worse, several interviewers did commit unambiguous violations: “If you want to match here, you have to let us know,” or “If we had a position for you, would you come here?”
...

" The atmosphere of gamesmanship extended beyond interviews. Some programs offered me formal “revisits” while others left it to me to request them. I wondered if it was necessary to travel to programs to improve my chances there. Soon after, program directors, faculty, or even residents I had met in passing started making recruitment calls, sometimes weekly.
No matter how friendly these callers were, their overtures always seemed to end with awkward pauses inviting me to make a commitment. After each one finished, I gave my standard reply, which soon became rote: “I loved visiting your program and would be honored to train there.” "

..."(Another program director inveighed against gamesmanship on the morning of a visit, but later that day, an interviewer stated outright that in order to match there I had to make a commitment to them.)... As the ranking deadline approached, I felt compelled to tell my top-ranked program that it was first, and painstakingly crafted enthusiastic e-mails to others. Many of the other applicants I know did the same.
Most of us applicants were rewarded for participating in these courtship rituals. I was told I was “ranked to match” by a number of programs, and it was public knowledge that other students were receiving similar commitments. That said, whatever relief these assurances gave us was tempered by horror stories from years past.One student had been sent real estate clippings from his top-choice program, covered with breathless Post-it notes: “Looking forward to seeing you here!” Weeks later, he was shocked to match at a different program."

*(Fisher, Carl Erik, 2009, "Manipulation and the Match," JAMA, 302,12 (Oct 1), 1266-7.)

Inside a philosophy search (from the labor demand side)

Lou Marinoff describes the search process that led to the hiring of two philosophers this year at City College of the City University of New York. They received 637 applications. They could have used an electronic application process...

"This posed a major filing challenge since less well-organized applicants sent in their materials in dribs and drabs. Hundreds of letters of recommendation not bundled with applications had to be opened, tallied and filed. At times, six boxes had to be displaced to file one piece of paper. It became a common sight to behold members of our search committee trundling half a dozen boxes to their offices on handcarts so they could keep up with the incoming deluge."

"The committee’s next task was to compile a “long list” of applicants to interview at the upcoming American Philosophical Association (APA) Eastern Division annual meeting. We had less than four weeks to identify and notify the candidates we wanted to meet with in time for the event, held December 27–30 in Philadelphia."

"How did we prune our field from 637 to 27? An important selection criterion was holding a Ph.D. from a good university. ...
A second criterion was research and publication. ...
Third, we needed evidence of undergraduate teaching ability as well as versatility. ...We looked for evidence of outstanding teaching ability, variety, and potential for curriculum development.
Finally, we wanted evidence of administrative service. "

After the interviews came the flyouts:
"We attained consensus on six finalists whom we invited to campus in February 2009. They ran a gauntlet of meetings, and each one had to give a “guest lecture” for an undergraduate course in progress – as opposed to reading a paper in a departmental colloquium. We knew they could all read and write well enough, or they wouldn’t have been finalists."

And finally came the negotiations with the administration
"Not long after handing our final rankings to Dean Reynolds, he called me into his office. He informed me that the abundant fruits of our search, and the energy we had invested in it, had not escaped the notice of our senior administration. Prudentially, I recalled the second of three infamous Chinese curses: “May the government be aware of you.” But this time it was a blessing."

Academic hiring wikis and jobmarket rumors

The internet offers a number of free-form information sharing sites for academic job seekers.

Had a bad experience on the job market? (Think things are hard in economics?) Check out the Universities to fear wiki, on which anonymous accounts of bad interviews in (mostly) humanities departments are recounted (e.g. travel expenses not reimbursed after flyouts, etc.)

See also Universities to love, which is also part of the Academic Jobs Wiki collection (you could start one in your field...).

Some specific fields that seem to have active rumor/wiki participation (by no means all accurate in content or agreeable in tone):

Economics Job Market Rumors

Political Science Job Rumors

IR RUMOR MILL and Jobs Board (if you have to ask, "IR" = International Relations)

Sociology Job Market 2009-10 and Wiki

Theoretical Particle Physics Jobs Rumor Mill
Theoretical Particle Physics Postdocs Jobs Rumor Mill

Astrophysics Job Rumor Mill (where you can find an ad for an Intergalactic Medium Fellowship)

Nobel to Elinor Ostrom and Olliver Williamson

I like it. I recall thinking when Ronald Coase won a Nobel that Williamson should have shared it. And Lin Ostrom is one of the few political scientists whose work I know reasonably well, very much oriented towards design (including the use of laboratory experiments).

Salary databases

This week, as economics graduate students start preparing their job market information, I'm planning to have several posts about job markets. I'll concentrate mostly on academic job markets, mostly in other disciplines. Today I'll focus on information about salaries.
Markets do many things, and one of them is to set wages. Americans are reticent about income, so there's always some interest in stories like this one in the Washington Post: What Washingtonians Make , from the President to an Abraham Lincoln portrayor (not the same guy)
One domain in which salaries are more or less public is government, which includes the pay of professors at state universities. At universities where salaries are public, this changes the culture a bit. When I was a professor at the University of Illinois, the fact that salaries were public (in those days you could check out the state budget book from the library, and find your name in it) meant that my young colleagues and I talked about our raises, and what they might mean, much more freely than at universities where salaries were private, not to say secret.
Non profit corporations of all sorts also have to reveal limited salary information on IRS form 990, stating the pay of officers and the top 5 salaries to non officers. This involves some game playing. When that requirement went into effect, I was teaching at the University of Puttsburgh. The first year, if memory serves, the top 5 salaries to non officers all went to active surgeons in the medical school. The second year, none of those surgeons was listed, the top 5 non-officer salaries were all much lower, and went to medical school department chairs. The surgeons weren't paid less, they had just shifted their compensation from reportable salary to non-reportable practice plan payments.
Below is a miscellaneous collection of searchable databases, including State salaries and Form 990's, thanks to the Freedom of Information Act.
State salary databases
http://wikifoia.pbworks.com/State-Salary-Database from Wikifoia, "The wiki for helping people understand and use the Freedom of Information Act at the state and local level."
Sunshine Review, "Establishing the Standard for Government Transparency" Public Employee Salaries

http://umich.highedsalaries.com/ Higher Education Salaries, seems to have salaries for Michigan, George Mason U, and Purdue... (Michigan was a pioneer in making salaries public on the web Faculty and staff salary record.Ann Arbor, Mich. : University of Michigan (excel spreadsheets, by year)) {Update from the comments: The student newspaper at Michigan has put up a better, searchable database of the Michigan salary information: http://data.michigandaily.com/tmdsal }
Ontario public salary disclosure for 2009 Ontario universities http://www.fin.gov.on.ca/english/publications/salarydisclosure/2009/univer09.html
British Columbia public salaries, with a searchable database.

Non profit companies: ERI Nonprofit Organization Information (IRS Form 990 data, including "Part V List of Officers, Directors, Trustees and Key Employees," and "Compensation of Five Highest Paid Employees Other Than Officers, Directors and Trustees (Schedule A)". (Some organizations fill out these forms more transparently than others.)
Private sector: I don't know of any comparable resources for private sector salaries (where no sunshine or freedom of information acts apply), although there are places where you can get samples rather than full databases, e.g. Glassdoor.com has http://www.glassdoor.com/Salaries/index.htm, and PayScale has a variety of surveys reporting average salaries, e.g. http://www.payscale.com/research/US/Country=United_States/Salary , with an index here http://www.payscale.com/index/US
Misc. updates:
Here is the summary of the Association to Advance Collegiate Schools of Business 2008-09 US SALARY SURVEY REPORT.
Here is a collection of state university salary databases.
and here: http://www.collegiatetimes.com/databases/salaries
university and college president salaries
The Dec. 2010 Forward publishes a list of salaries of Jewish community organization leaders.

Last minute tickets at sold out Fenway

The Red Sox, whose home games are always sold out, reserve some tickets for last minute purchase: At Sold-Out Fenway, a Way in for Patient Fans .
"For every home contest, whether a weekday game in April or a Game 7 in October, the Red Sox set aside some tickets for fans who did not plan ahead. There may be a few dozen seats available, there may be a few hundred. The point is, they are available, every game, for those who waited too long but are willing to wait a bit longer.
Starting five hours before the scheduled first pitch, fans can line up on the sidewalk near Gate E, around the corner from hectic Yawkey Way. There is a red-and-white sign reading “Game Day Ticket Sales,” and there are a pair of green roll-up doors. Two hours before the game, the doors are raised and tickets are sold at face value. "
...
"“To us, it’s part of a long-term strategy,” said Ron Bumgarner, the team’s vice president for ticketing. “We do not want every fan at Fenway Park to be a season-ticket holder with 81 games. We want as many different people in Red Sox Nation as possible to be able to come to the games.”
Such a system comes with strict rules, and several copies of them are pasted near Gate E. First, five hours is deemed the perfect amount of wait time — too short to spend the night (which used to be allowed, but created the predictable unruliness) but long enough to make it a bit of a chore.
Second, fans must stay in line and cannot save spaces for other fans. In other words, no sitting across the street at the Cask ’n Flagon, or under the center-field stands at the Bleacher Bar, draining beverages while a buddy reserves a spot until the last minute.
Third, once the tickets are purchased — only one per person — fans must enter the ballpark. That means no scalping the ticket to the highest bidder, a temptation for big games."

Sentenced to prison? Hire a consultant.

The NY Times reports (in the Sports section) that
Consultants Are Providing High-Profile Inmates a Game Plan for Coping

"The former Giants wide receiver Plaxico Burress, who is serving a two-year sentence for a weapons charge, recently joined a growing list of high-profile inmates who have hired prison consultants to help them navigate their entry to a confined life. Others have included Bernard L. Madoff, Michael Vick, Mike Tyson, Martha Stewart and Leona Helmsley."

Book publishers, and book citations

It is customary when citing a book in the bibliography of a scholarly article to include the publisher, and the name of a city associated with that publisher. This seems to be a holdover from the days when publishers were relatively small, and perhaps when the British and American versions of a book with the same publisher might have some differences. And maybe knowing the city would help you find the book.

But book publishing has changed, and when I look at the front material of a scholarly book today, as often as not I see something like
"Morgan Kaufmann Publishers, An Imprint of Academic Press, A Division of Harcourt, Inc., San Francisco, San Diego, New York, Boston, London, Sydney, Tokyo."

Maybe it's time to change our citation conventions. (Or maybe, next time you're in Sydney, you'll have a special opportunity to pick up that book...)

Complementarities in markets and computers

One thing that makes it difficult for markets to clear efficiently is if goods are complements, so that you only want good A if you can also have good B (e.g. you need two licences of adjacent-frequency radio spectrum to carry out your broadband business plan, or you are willing to take job A only if your spouse can get an appropriate job in the same city). If the market isn't designed to take this into account, there might be coordination failures, in which some buyer ends up having paid good money but having gotten only part of what he needs, or in which you and your spouse end up with jobs in different cities. Combinatorial auctions, and labor clearinghouses that accomodate couples, are market designs that seek to avoid these kinds of coordination failures.

The same kind of thing can cause your computer to freeze. If program A needs parts X and Y of your computer memory, and so does program B, and they each lock up one of those components while they try to call the other, you may have to send the children out of the room and reboot. The programming solutions for avoiding this can involve some sort of clearinghouse. Here's an article on the subject from Dr. Dobb's Journal: Lock Options, A compile-time deadlock prevention scheme.

The introduction begins:
"The two major problems in concurrent programs are data races and deadlocks. Races occur when two or more threads are accessing shared memory without proper synchronization. Deadlocks occur when synchronization is based on locking and multiple threads block each other's progress. In a typical deadlock scenario, thread A locks the mutex X, and thread B locks the mutex Y. Now, in lockstep, thread A tries to lock Y and B tries to lock X. Neither can make progress, waiting forever for the other thread to release its lock. The program freezes.
In a sense, data races are the opposite of deadlocks. The former result from not enough synchronization, the latter usually happen when there's too much synchronization and it gets out of hand.
There are sophisticated schemes to prevent races and/or deadlocks, but they either require special language support or strict discipline on the part of programmers. Here I present a solution based on a well-known deadlock-avoidance protocol and show how it can be enforced by the compiler. It can be applied to programs in which the number of locks is fixed and known up front."
HT: Ted Roth

Real estate; disaggregating a bundle of services

There are cracks beginning to show in the way real estate is sold. For a long time, the only realistic option for selling a home was to employ a full service realtor, who sells a whole package of services bundled together, and charges five or six percent of the selling price of the house.

But as the internet has eroded the Multiple Listing Service monopoly on home listings, it is beginning to be possible for sellers to put their own homes on the market, with the assistance of a la carte services from realtors.

One such service in the Boston area, http://eplacehomes.com/ offers just such an a la carte "menu of services". It will be interesting to see where this leads, in a market whose standard, full service contract, with a 6% realtor's commission, became strained as house prices rose into seven figures in many communities. (See this earlier post on broker rebates to buyers.)

Skydeck360: Signaling in the MBA Job Market

Harvard students Abhinav Agrawal, Patrick Chun and Yasser Salem have launched a platform for students to signal interest to employers looking to hire MBA students. The premise of the platform is quite similar to the signaling mechanism used by the AEA, in that the scarcity of the signals is what creates credibility:

"Skydeck360 will go live in October, and will initially be available for only [1st year MBA] students. The tool is designed for simplicity: all students have to do is sign up on the Skydeck360 website and indicate their top choice companies. This data will then be automatically aggregated and shared with recruiters by Skydeck360 in early November."

One interesting facet of the platform is that it is run as an entrepreneurial venture, rather than by the school itself, and so is an interesting marriage of signaling and entrepreneurial market design...

Article: http://www.harbus.org/home/index.cfm?event=displayArticle&uStory_id=677fb978-c83d-4c25-bff3-0ee233de1a5d

Matching with contracts

When Marilda Sotomayor and I wrote our 1990 book on matching, we divided the book into models without money (like the marriage model) and models with money (like auction models), and showed how similar results obtained for both kinds of models. There's been lots of recent progress in unifying those models and understanding why the results were so similar. The most recent paper in this literature is by John Hatfield and Scott Kominers, Many-to-Many Matching with Contracts, and I asked them to write a blog post about it, which appears below.

"A few years ago, Hatfield and Milgrom (2005) introduced "(many-to-one) matching with contracts," a generalization of classical two-sided matching in which contracts between agents specify both (1) a matching and (2) conditions of the match (such as wages, hours, or specific responsibilities). The results of Hatfield and Milgrom (2005) are surprisingly general--although presented using matching-theoretic language, the Hatfield and Milgrom (2005) model encompasses not only two-sided matching but also several package auction models.Hatfield and Milgrom (2005) assumed a many-to-one matching market, that is, a market in which agents on one side of the market (the "doctors") were never allowed to sign more than one contract. Although reasonable for some applications of matching (such as school choice), some matching applications (such as the United Kingdom Medical Intern match) allow "many-to-many matching," in which every agent can be assigned to multiple agents on the other side of the market.In "Many-to-Many Matching with Contracts," we develop a theory of "many-to-many” version of matching with contracts which extends the model of Hatfield and Milgrom (2005) to allow all agents to accept multiple contracts.This framework extends contract matching to a host of applications not previously covered by generalized matching theory, including the United Kingdom Medical Intern match (discussed above), the United States National Resident Matching Program (which allows agents to pair together and match as "couples" who can receive two jobs), and the matching of consultants to firms. Additionally, many-to-many matching with contracts generalizes the theory of bilateral "buyer-seller markets".
We prove that substitutability of preferences (for agents on both sides of the market) is both sufficient and necessary to guarantee the existence of stable many-to-many contract allocations; in many-to-one applications, in contrast, weaker conditions than substitutability guarantee existence. This result shows that, in general, a stable match is not guaranteed to exist in the matching with couples problem, since couples' preferences are generally assumed to be non-substitutable by nature. These results also provide insight into why the necessity result does not hold in the many-to-one matching case, and allows us to identify a new class of non-substitutable many-to-one preferences which are in some sense projections of substitutable many-to-many preferences, and for which the existence of a stable match is guaranteed."

Market prediction and the Challenger disaster

Michael Trick has a post on Models, Information, and Market Rationality which shows a graph of the stock prices of Morton Thiokol, Lockheed, Martin Marietta, and Rockwell, in the hours after the Challenger disaster.
"The stock price for all of the companies immediately dropped 7-8% after the disaster. Within an hour, three companies went back up to being just 2-3% down, while one company further decreased: Morton Thiokol. The company responsible for the O-ring (of Richard Feynman and ice water fame): Morton Thiokol. It is certainly provocative that the market seemed to know something immediately that took an investigation months to determine. ...
But, as Bryan reminds me, this was not exactly a mystery to everyone at the time: the engineers involved strongly suspected early what the issue was and later fed that information to Feynman. So the information was out there and perhaps that information leaked out to the market in the immediate aftermath of the explosion. So perhaps it is not so mysterious after all. And there may well be other explanations for the larger drop off by Motton Thiokol."

Prediction markets and Olympic cities

Over at MidasOracle.org the word is that Chicago won’t have the Olympics in 2016, despite the predictions of a number of well known prediction markets.

"The Chicago candidacy, which was favored by the prediction markets ...is the one that fared the worst."

"The prediction markets are not able to forecast which country will get the Olympics. The IOC is a close aristocratic group that does not leak information. Hence, it is not possible to aggregate information." (emphasis in original)

I guess President Obama also thought that Chicago had a good chance.

Incentives and food safety

In a disturbing story on food safety, the NY Times focuses on ground beef and reports E. Coli Path Shows Flaws in Ground Beef Inspection .

The problem has to do with both incentives and regulation. While companies have incentives to try to avoid selling contaminated food, it turns out there are incentives for not knowing where the contamination originated, and this makes it hard to eliminate. The problem is that most ground meat is a mix of meat scraps purchased from many providers.

"Meat companies and grocers have been barred from selling ground beef tainted by the virulent strain of E. coli known as O157:H7 since 1994, after an outbreak at Jack in the Box restaurants left four children dead. Yet tens of thousands of people are still sickened annually by this pathogen, federal health officials estimate, with hamburger being the biggest culprit. Ground beef has been blamed for 16 outbreaks in the last three years alone, including the one that left Ms. Smith paralyzed from the waist down. This summer, contamination led to the recall of beef from nearly 3,000 grocers in 41 states. "
...
"Ground beef is usually not simply a chunk of meat run through a grinder. Instead, records and interviews show, a single portion of hamburger meat is often an amalgam of various grades of meat from different parts of cows and even from different slaughterhouses. These cuts of meat are particularly vulnerable to E. coli contamination, food experts and officials say. Despite this, there is no federal requirement for grinders to test their ingredients for the pathogen. "

That is, food processors are required to test their final product, but not their ingredients.

"Those low-grade ingredients are cut from areas of the cow that are more likely to have had contact with feces, which carries E. coli, industry research shows. Yet Cargill, like most meat companies, relies on its suppliers to check for the bacteria and does its own testing only after the ingredients are ground together. The United States Department of Agriculture, which allows grinders to devise their own safety plans, has encouraged them to test ingredients first as a way of increasing the chance of finding contamination.
Unwritten agreements between some companies appear to stand in the way of ingredient testing. Many big slaughterhouses will sell only to grinders who agree not to test their shipments for E. coli, according to officials at two large grinding companies. Slaughterhouses fear that one grinder’s discovery of E. coli will set off a recall of ingredients they sold to others." (emphasis added)
...
"The retail giant Costco is one of the few big producers that tests trimmings for E. coli before grinding, a practice it adopted after a New York woman was sickened in 1998 by its hamburger meat, prompting a recall."
...
"But even Costco, with its huge buying power, said it had met resistance from some big slaughterhouses. “Tyson will not supply us,” Mr. Wilson said. “They don’t want us to test.” "

Kidney sales

Here's a very interesting 9 minute YouTube video on kidney sales, including in the U.S.:CNN Reports On The Buying & Selling Of Human Organs - 10/03/09

It argues that (illegal) sales in the U.S. may still be rare, but not rare like unicorns.

HT to Chris. F. Masse, http://www.midasoracle.org/

Course allocation by Budish, updated

Eric Budish's updated (and still remarkable) paper is here:
The Combinatorial Assignment Problem: Approximate Competetive Equilibrium From Equal Incomes,
and Eric himself is now at Chicago's Booth School of Business.

Here is my previous post on the first version of that paper (which was Eric's jobmarket paper).

Hotbeds of innovation: food in Portland

Why are Silicon Valley and Cambridge MA hotbeds of innovation? A nice NY Times story about the culinary scene in Portland Maine, by Julia Moskin, might give some insights: In Portland’s Restaurants, a Down East Banquet .
"Portland’s many chefs and bakers, its turnip farmers and cookbook sellers and assorted mad food geniuses are gearing up for another lively winter.
“I wouldn’t call it a competition, I’d call it a collective,” Josh Potocki, the chef and owner of 158 Pickett St. Café in South Portland, said of the city’s food scene. “We are all trying to raise the level of food in Portland to insanely high.” ...
"Chefs here feed off one another’s work in a way that’s impossible in larger cities (Portland’s population is about 65,000, and it has a compact urban center), constantly eating in and commenting on one another’s restaurants. “I’ve made enemies, for sure,” said Joe Ricchio, a bartender who makes Vietnamese pho on his days off, has a weakness for flaming scorpion bowls, and writes a blog titled Portland Food Coma.
In 2007, Mr. Ricchio started a festively debauched event now known as Deathmatch, a kind of extended “Iron Chef” dinner, with each invited chef contributing a course. “Each one takes five years off your life,” Mr. Ricchio said."...
"Most of Portland’s young chefs ...have worked in — and walked out of — one another’s kitchens. ...Many have cycled through the twin temples of Sam Hayward’s Fore Street or Hugo’s on Middle Street, where Rob Evans is the chef. These are the kitchens that first defined Portland as a destination for rigorously local and regularly delicious food. "...

“Ninety percent of the best restaurants are chef-owned, small, single-operator places,” said Samantha Hoyt Lindgren, an owner of Rabelais, an all-food bookstore on Middle Street ...“That makes a huge difference in the quality of the food and the relationships with purveyors,” she said."..."And for chefs to become owners, the price of entry — key money, kitchen renovation, etc. — is relatively low. "

For related earlier posts, see Market for hand crafted food and Market for hand crafted food, continued

Klemperer's auction design for toxic assets

Over at voxeu.org, Paul Klemperer writes about Central bank liquidity and “toxic asset” auctions, which describes briefly his paper

Klemperer, Paul (2009). “The Product-Mix Auction: A New Auction Design for Differentiated Goods”.

In his Voxeu post he says "The product-mix auction yields better “matching” between suppliers and demanders, reduced market power, greater volume and liquidity, and therefore also improved efficiency, revenue, and quality of information than feasible alternatives. Its potential applications therefore extend well beyond the financial context."

Michael Kearns heads up a new market design program at Penn

The University of Pennsylvania today issued a press release announcing a new undergrad program: Penn Launches Undergraduate Program in Market and Social Systems Engineering, Nation’s First.

"PHILADELPHIA -- The University of Pennsylvania has launched a first-of-its-kind program that will prepare undergraduate students to shape the technologies that underpin Web search, keyword auctions, electronic commerce, social and financial networks and the novel and unanticipated markets and social systems of the years ahead. "
...
"“Traditional programs don’t prepare students to design systems that take into account the goals and incentives of the people who use them,” said Michael Kearns, professor in the Department of Computer and Information Science in Penn’s School of Engineering and Applied Science and the program’s founding faculty director. “We haven’t asked engineering students to take a course in game theory to understand how incentives work or in sociology to understand human behavior. There is now enough science out there on the intersection of these topics to design undergraduate courses.”
In 2003, Kearns developed a Penn course, Networked Life, which engages students in hands-on explorations of the networks in which they participate every day. Now one of the most popular courses at the University, Networked Life also served as a proving ground for the larger MKSE program of which it will become a part.
Kearns is the National Center Professor of Computer and Information Science in Penn Engineering, with secondary appointments in Statistics and Operations and Information Management at The Wharton School. "

Further unraveling of basketball recruiting

Zhenyu Lai, a graduate student in Economics at Harvard, who is taking Market Design this semester, sent me the following email, which he gave me permission to reproduce below.

After last friday's class discussion on unravelling in markets, I came across this article about unravelling in NCAA basketball with a ton of good quotes and anecdotes.

What is particularly interesting is about the role played by agents. Increasingly, agents try to form relationships with potential NBA players early on in their college careers. And they're not just targeting the surefire stars, but gambling on marginal prospects.

Interesting excerpts:

1. Technological improvements aid unravelling markets. Agents are using facebook to make contact with players early.

2. Official rules are abused. Similar to the market example on clinical psychologists, looking at the NCAA rules for agent recruiting is very indicative of the unraveling problem. "Agents are free to contact players in high school or in college through social networking sites, on the phone or in person. As long as there is no written agreement or money exchanged, an agent or a representative of an agent can form a relationship with a player, his family and/or his handlers." An agent is quoted, "It's not breaking the rules. You're just building a relationship with a potential client down the road.". The columnist describes this as "the new normal in amateur basketball."

3. Coaches are in on it too. Much like the market for law clerks, agents (aka judges) develop relationship with coaches (aka law school deans) to ensure that they are making "a sound investment" on their prospect. However, coaches are getting ticked off. The "right way" to do this is apparently for the agents to approach the coach and the player's parents first, not to directly add the player on facebook, where the player may then bypass the coach completely.

4. Agent's argument for unravelling. "Domantay's argument for an agent's trying to make inroads in a profession dominated by an elite few is that if he were to wait until a college player's senior year, he becomes just another name on the list."

5. Argument that unraveling is bad. "If an agent contacts a kid directly, then there should be repercussions. Guys get in with kids and prey on the youthfulness and financial backgrounds and offer things to lock them in and set up a potential for blackmail: If I gave you this, then you owe me." Agents are using runners to form relationships with kids early and leveraging on family contacts and relationships. There is an aura of suspicion where high school kids are wary of who to trust.

6. Agent's motivation for promoting unraveling. "Whoever can control the kid can control the revenue stream -- [maybe] it's a kid going to college benefiting the college coach and leading to a better job. the player dictates the revenue. Everybody is trying to get in sooner and sooner however they can."

Interestingly, the columnist ends off with this quote which is filled with a tone of finality that unraveling is inevitable and an enduring legacy of capitalism,

"The pool of talent, with leagues all over the globe to fill and money to be made, means that anybody with potential is in play to be courted, and so too are their families, their friends, and their AAU and high school coaches. That's the new reality for college coaches. And there's no reason to think it will ever change back."


My thoughts on unraveling in college basketball:

1. High school students are usually at an impressionable age and easily influenced by people close to them, prompting this 'unraveling' process of agents trying to get close to them. While high school students might not be expected to make savvy long-term agent decisions, more needs to be done to make the agent seem like the "bad guy" for approaching the student early. No binding contract is allowed, and kids are empowered to change agents anytime. However, especially if the agent has some influence on a family member (or is a family member..), severing an agent relationship might be tricky. To discourage unraveling, there needs to be lower barriers to changing agents.

2. The NCAA doesn't have jurisdiction over agents (like in the case of federal judges), but some states do where a law states that there can be "significant damage resulting from the impermissible and often times illegal practices of some athlete agents. Violations of NCAA agent legislation impact the eligibility of student-athletes for further participation in NCAA competition". This law is passed in 38 states. However, this law affects the athletes and not the agents. One remedy would be for the NBA to revoke the right of agents to represent their clients if a recruiting violation is found. Agent's licenses could be subject to yearly review. Entry into the agent profession could be tightly regulated.

3. Perhaps NBA draftees could attend an "agent convention" where they could interview various representatives and have the right to choose from among them without any pressure. If it were a standard practice to be connected with legitimate agents only after you enter the NBA, players would then in no way be obliged to sign with an agent early even if they were to have already accepted illegal gifts.

Further consequences of unraveling of law firm hiring

The Crimson reports on the difficulties facing Harvard Law students graduating in this recession year: Tough Times For Harvard Lawyers

"The two-year lag between when firms extend job offers and when employees begin their first year forces firms to predict associate demand far in advance of the start date and leads to inaccurate predictions of hiring needs. According to Weber, the backlog of entry-level associates or “overhang” is negatively impacting firm demand for associates in this recruiting cycle. After the financial crisis pummelled investment banks and the fountain of transactional work dried up, law firms were forced to keep the commitments they made to new hires two years earlier. The result: a spate of deferred start dates that began with the class of 2009 and may continue with the class of 2010. "

A proliferation of penny auctions

Last year I thought about blogging about Swoopo, the "entertainment shopping" site that is run as an "all pay" auction for consumer goods, in which all bidders must pay to bid, but only the winning bidder receives the object. But soon enough there were excellent posts on the subject by others. I particularly like Ian Ayers at Freakonomics, who explained how Swoopo is similar to the "escalation auction" proposed years ago by Martin Shubik, which has become a staple demonstration in game theory classes, and Tyler Cowen at MR, who observes that Swoopo auctions can make a lot of money for the owners of the site, while most of the bidders lose. He writes "In short, swoopo is about as close to pure, distilled evil in a business plan as I've ever seen. " (emphasis in original). And here's the Wikipedia entry.

Swoopo bidders are a bit of a puzzle of the behavioral economics kind: are they like buyers of lottery tickets, who know that they will likely lose but find entertainment value by purchasing the right to dream (see this paper by Emily Oster)? Or are they making mistakes? And if the latter, will demand for this kind of auction dry up? Or will new suckers keep appearing?

But there are other, market level questions we can ask, and I got the beginning of an answer when I did a google search on "swoopo", or another search on "penny auction" . You'll find two things if you click on those searches: there are now a lot of similar auction sites, and there are also plenty of people who are eager to sell you software to set up your own "penny auction," as these sites have come to be known.

(BidRodeo's icon is a man on a bucking bronco, over the motto "Hold on the longest and win!")

What are the questions to which those observations are the beginnings of answers? I guess one is, "is it easy to earn outsized rents by selling to the gullible?". I presume most of the new sites make very little money. Whether they also attract away swoopo's customers or otherwise reduce swoopo's rents remains to be seen.

A new (job market) paper by Edward Augenblick at Stanford suggests that the already-established penny auctions may not disappear in the blink of an eye: Pay-As-You-Go: Theoretical and Empirical Analysis of a New Auction Format

He finds Swoopo to be quite profitable, and the abstract concludes:
"Finally, I attempt to address the long-term prospects of the market for these auctions. Using high frequency auction supply and user data, I estimate the current and optimal supply of auctions for a given number of users. This analysis suggests that the structure of the auction creates barriers to quickly developing a large userbase, allowing the most-established competitor to continue making large profits in the medium-term. This analysis is supported by auction-level data from five competitors. "

HT Eduardo Azevedo and Muriel Niederle

When a protected transaction meets a repugnant one: The MA suit over the Defense of Marriage Act

Same sex marriage raises issues involving both repugnant transactions and protected transactions. On the one hand, marriage is one of our most protected transactions: we reserve many rights for married couples, and a good deal of law and political rhetoric concerns marriage. But many people find marriage between anyone other than one man and one woman repugnant.

Nowhere is this clearer than in the lawsuits being pressed by the Commonwealth of Massachusetts (which was the first U.S. state to recognize same sex marriage) and other parties against the United States, in an attempt to roll back the federal Defense of Marriage Act.

At issue are the rights of married couples. Specifically (because marriage is a protected transaction), spouses are entitled to tax and other benefits. But (because some people find same sex marriage repugnant) the federal law denies same sex spouses married in Massachusetts federal benefits for married couples.

"Because of the law, the plaintiffs said, they were excluded from using federal benefits that opposite-sex couples can obtain, including health insurance programs for federal employees, retirement and survivor benefits under the Social Security Act, and the ability to file joint federal income tax returns."

That quote is from a story ( US lawyers defend letter of gay marriage ban) that emphasizes how this suit puts lawyers in the Obama administration Justice Department in the unusual position of defending the legality of a law that the administration would in fact like to see repealed.
"Government attorneys said in a brief filed yesterday in US District Court that the administration believes the federal Defense of Marriage Act, which bars the federal government from recognizing same-sex marriages, is discriminatory and wants it repealed.
“Consistent with the rule of law, however, the Department of Justice has long followed the practice of defending federal statutes as long as reasonable arguments can be made in support of their constitutionality, even if the department disagrees with a particular statute as a policy matter, as it does here,’’ the attorneys said."

(The MA suit is formally called Commonwealth of Massachusetts v. United States Department of Health and Human Services et al, and an associated suit is Gill et al. v. Office of Personnel Management, and here is the formal complaint, brought by GLAD, the Gay & Lesbian Advocates & Defenders.)

Reserving spaces in crowded places

It may be possible for vacationing Germans to reserve rental lounge chairs at a crowded beach or pool, but in Saudi Arabia it's a crime to reserve rental prayer mats, the Saudi Gazette reports: 2 held for renting Haram prayer space. It appears that both the reserving and the renting are repugnant.

"MAKKAH – Two persons have been arrested for reserving prayer spaces and renting them out to worshippers at Isha and Taraweeh prayer times...“The practice has diminished a lot this year,” Al-Wabil said. “However, we will show no lenience to anyone caught.”All persons who have been arrested for renting out prayer spaces have been foreigners, Al-Wabil said, adding that culprits are identified through a period of surveillance of individual carpets and persons claiming them beginning half an hour before the start of prayers.Sheikh Saleh Bin Fawzan Al-Fawzan of the Board of Senior Ulema and the Permanent Committee for Ifta ruled last week that reserving prayer spaces at the Grand Mosque in Makkah or the Prophet’s Mosque in Madina was “haraam”, or forbidden.“It is forbidden to reserve places in the mosques, unless the person has left for urgent reasons and intends to return soon, as otherwise it is tantamount to taking something by force,” Al-Fawzan told Okaz newspaper on Thursday. “It is also forbidden to rent a reserved place, and the authorities should put a stop to this vice (munkar).”

HT: Anouar El Haji at U. Amsterdam

Are names destiny?

Does your name influence your choice of career? The following paragraph caught my eye, from a NY Times story on testing the safety of motorcycle helmets.

"Hugh H. Hurt, a researcher who developed the Head Protection Research Laboratory at the University of Southern California, and author of the Hurt Report, a seminal study of motorcycle crashes, calls the current Snell M2005 standard “a little bit excessive.” "

Thaler on mandated choice

In the NY Times, Dick Thaler considers how the way people are asked whether they would like to be deceased organ donors might influence the donation rate: Opting in vs. Opting Out .

Thaler thinks organ sales are too widely viewed as repugnant to be politically feasible. And despite the headline, he comes out in favor not of opt in or opt out as defaults, but rather mandated choice, a nudge of the kind he and Cass Sunstein celebrate in their best selling book of that name.

"Here is how it works: When you go to renew your driver’s license and update your photograph, you are required to answer this question: “Do you wish to be an organ donor?” The state now has a 60 percent donor signup rate, according to Donate Life Illinois, a coalition of agencies. That is much higher than the national rate of 38 percent reported by Donate Life America
The Illinois system has another advantage. There can be legal conflicts over whether registering intent is enough to qualify you as an organ donor or whether a doctor must still ask your family’s permission. In France, for example, although there is technically a presumed-consent law, in practice doctors still seek relatives’ approval. In Illinois, the First-Person Consent Law, which created this system, makes one’s wishes to be a donor legally binding. Thus, mandated choice may achieve a higher rate of donations than presumed consent, and avoid upsetting those who object to presumed consent for whatever reasons. This is a winning combination.
THE key, however, is to make signup easy, and requiring people to make a choice is just one way to accomplish it. The private sector could help create other simple methods. Here is a challenge to Mr. Jobs: Why not create a Web site — and a free app for the iPhone — that lets people sign up as organ donors in their home states? "

(Note from my earlier post on Steve Jobs' liver transplant that Massachusetts is one of the few states that allows you to sign up to be a donor online, and see also Thaler's remarks at the bottom of this other earlier post.)

One of the things I like about signing up online is that it allows people to think about organ donation at places other than the Department of Motor Vehicles. I wonder if that's the only place we should be asking people about donation; or whether that location invites you to think too much about fatal car crashes (which are far from the only way to become an organ donor, and which you might prefer not to think about).

On the DMV form at the top of the page you can see that here in Massachusetts we have "opt in" for organ donation, but mandated choice for voter registration. (You can enlarge the photo by clicking on it, if you're reading this on a small screen.) So Thaler's good suggestion would be easy to implement, a very gentle nudge in the right direction.