Efficient random allocation of discrete goods, Mihai Manea

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

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

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

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

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

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

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

Welcome to the club, Mihai.

Behavioral contract design; Steve Leider

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

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

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

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

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

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

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

Welcome to the club, Steve.

Course allocation, by Eric Budish

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

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

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

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

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

Welcome to the club, Eric.

Market for authenticity: sports memorabilia

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

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

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

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

How's that for product differentiation?

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

Giving anonymously, through an intermediary

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

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

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

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

Market for hand crafted food, continued

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

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

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

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

College admissions waiting lists: advice on signaling

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

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

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

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

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

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

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

Why people don't sign organ donor cards

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

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

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

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

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

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

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

Match Day for New Doctors, the book

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

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

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

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

Real money trading in Massively Multiplayer Online Games

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

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

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

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

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

Forward contracts on sporting events

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

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

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

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

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

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

Update on the Economics Job Market "Scramble"

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

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

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

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

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

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

Good luck to all those still seeking a match.

Market for sugar daddies

Not all dating sites have marriage as their goal.

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

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

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

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

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

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

Market design and experimental economics

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

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

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

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

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

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

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

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

Malls

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

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

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

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

Market for eggs and sperm

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

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

Repugnant transactions: cartoon edition

Prophet Muhammad Cartoon Goes on Sale in Denmark

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

Same sex marriage in Iowa, and New England

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

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

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

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

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

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