Repugnant transactions in Inauguration tickets

eBay to Ban Resale of Inaugural Tickets

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

Market for lawyers

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

It contains two insights into the market that struck me:

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

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

Treasury abandons plans for reverse auction to purchase troubled assets

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

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

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

Market for medical services: time of day

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

Market for spam

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

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

College admissions, international

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

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

Market for check cashing and payday loans

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

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

Academic marketplace

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

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

Pope Benedict speaks about organ transplantation

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

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

*********

Update of stale links (June 2022)

NOVEMBER 7, 2008  UPDATED 14 YEARS AGO

Pope slams human organ trade, warns on transplants

Animal organs for human transplants

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

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

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

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

Market for professors

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

Gay marriage: one step forward, 3 steps back

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

In Massachusetts, a referendum banned greyhound racing.

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

School choice in England

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

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

Telephone call pricing between telephone companies

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

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

The market for science

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

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

Incentives for students who get good grades

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

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

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

Labor Market Intermediation

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

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

The Federal Reserve’s Term Auction Facility

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

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

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

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

Credit Default Swaps: reducing counterparty risk

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

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

HT to PrefBlog

Bank secrecy:

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

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

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

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