Hal Varian on ad auctions

Muthu Muthukrishnan at Google in NY has a nice post about Hal Varian, Google's chief economist and a pioneer of the economics of the internet (among other things*). Here is a youtube video in which Hal gives an elementary explanation of Google's ad auction. MR points to this article about Hal in Wired: Secret of Googlenomics: Data-Fueled Recipe Brews Profitability.

Here is Hal's recent paper Online Ad Auctions, forthcoming in the May 2009 AER Papers and Proceedings. Here is Hal's earlier paper, Position Auctions, published in the 2007 International Journal of Industrial Organization. One nice thing about both these papers is that they explicitly take note of the link between ad auctions and the matching literature.

*Hal is the original Renaissance economist. Aside from his academic work on subjects from the internet to public goods provision, he's an author of bestselling texts and business books, and was for many years a NY Times columnist. One of his columns, When Economics Shifts From Science to Engineering, August 29, 2002, on the subject of market design, was about a paper of mine. When I marveled at how succinctly he was able to summarize, he told me that his secret (quoting Elmore Leonard) was to "leave out the parts that people skip."

Waiting lists and late college applications

Students who may be waiting to see if they will be offered positions from some colleges' waiting lists should also be aware that other colleges are still accepting applications.

The Common Application .org has posted a list of 67 of their members who are still accepting applications (including the University of Chicago):
Augsburg College, Berry College, Canisius College,Carroll College, Cazenovia College, College of Mount Saint Vincent, College of Santa Fe, College of St. Benedict-St. John's University, Colorado State University, Converse College, Creighton University, Culver-Stockton College, Curry College, Dominican University of California, Franklin Pierce University, Green Mountain College, Gustavus Adolphus College, Hofstra University, Illinois College, Illinois Institute of Technology, Keystone College, Lasell College, Lawrence Technological University, Loyola University New Orleans, Lynn University, Manhattan College, Marquette University, New England College, Nichols College, Notre Dame de Namur University, Oglethorpe University, Pacific University, Prescott College, Regis College (Massachusetts), Regis University (Colorado), Rollins College, Russell Sage College, Sacred Heart University, Sage College of Albany, Salem College (North Carolina), Seton Hall University, Seton Hill University, Southern New Hampshire University, St. Lawrence University, St. Norbert College, SUNY Fredonia, SUNY Oswego, TCU (Texas Christian University), The College of Idaho, Thiel College, Thomas College, University of Chicago, University of Dallas, University of La Verne, University of Maine, University of Maine at Machias, University of Massachusetts Boston, University of New Haven, University of Tampa, Utica College, Valparaiso University, Wabash College, Webster University, Westminster College (Missouri), Westminster College (Utah), William Jewell College, Xavier University

David Warsh on Auctions and Politics

David Warsh, the Boston-based economic journalist whose weekly internet column Economic Principals talks about economics and economists, writes about last week's NBER Market Design Working Group Meeting, which he attended.

Market design has blossomed in the last decade, in directions that would have been hard to predict. It has also made enormous progress in one of its oldest streams, auction design. This first NBER conference on market design had as its main theme the progress that has been made in auction design, by economists and computer scientists, since the first spectrum auctions in 1994. Warsh writes about that, and the political processes involved in persuading governments to adopt the new auction technologies (not to mention simply communicating them): Auctions and Politicians.

Market for textbooks

The Washington Post has a story on the educational software company Aplia, founded by Paul Romer: An Economist, an Academic Puzzle and a Lot of Promise. It makes a number of interesting observations about the design of the textbook market, and how interactive software that gives students immediate feedback, and lets them participate in experimental economics style interactions, complements the traditional textbook and lecture style of instruction.

"Students seemed to like Aplia's engaging and easy-to-use software, as well as the feedback. Professors liked Aplia even more. It allowed them to leverage the grade-grubbing instincts of today's college students to get them to do homework -- but without having to spend countless hours reading and correcting the assignments. They also got reports from Aplia identifying which students were having the most trouble with the material and which concepts were stumping the class as a whole. "
...
"By relieving instructors of the considerable burden of reviewing homework assignments, the technology makes it possible for universities to require professors to teach more students, either by increasing class sizes or the number of classes they teach. More important, it frees instructors to spend more time preparing for class, working with individual students and even doing their own research. "

It may also allow publishers to circumvent the secondhand market for textbooks, as the software license can be separated from the book.

HT: Greg Mankiw

Markets for hunting

In New England, battles about repugnant transactions often pit social liberals against social conservatives, with the liberals trying to make some transaction possible that the conservatives believe should be banned, as in debates about Same sex marriage in Iowa, and New England.

But there are other kinds of transactions that liberals find repugant and conservatives defend. One of these concerns buying and selling permission to shoot captive game in game farms: Slaughter to some, game to others: Hunting preserves offer captive animals

"For the privilege of killing two boars, Cabral's father and grandfather paid $1,200. By their reckoning, that gets them enough bacon, pork chops, and ham to last their families nearly a year.
"I see it like I'm going grocery shopping," said Russell Mulgrew, Cabral's grandfather.
Not everyone shares that view. Opponents, including some hunters, say captive hunting is anything but sporting for one simple reason: There is no fair chase when the animal has no hope of escape.
As commercial interest grows in Maine to expand these preserves and opposition ratchets up across the country, a deep-seated ethical debate over the ranches is being pushed into the public eye.
"It's morally and ethically wrong to enclose animals and charge a fee to kill them. It's a theme park environment where the prize is a dead animal," said Robert Fisk Jr., president and director of Maine Friends of Animals.
New England's captive parks attract hundreds of hunters each year. In Maine, 388 animals were killed in 2005, although that fell to 262 by 2007. The parks rarely make headlines unless it's about someone notable - such as Massachusetts' former governor William F. Weld boasting about shooting a wild boar in 1991 but initially failing to say that it was in a New Hampshire game park.
Vermont banned new game preserves late last year, largely over concerns about disease, especially chronic wasting disease, a contagious, fatal neurological illness among deer. An effort to outlaw seven existing shooting ranches in Maine for ethical reasons, which was supported by Fisk's group, failed last month. Two other Maine bills are pending: one to permit a new game preserve and the second to expand the variety of animals at others. New Hampshire has two game parks, but no new ones are allowed.
Big-game shooting preserves are prohibited in Massachusetts, Connecticut, and Rhode Island. Still, it is estimated that there are more than 1,000 game ranches in at least 28 states, according to the Humane Society of the United States, which has an ongoing campaign to end captive hunting. Debates over the ranches have surfaced from New York to North Dakota in recent years."

In England, a legal ban on hunting foxes with dogs (the whole picturesque business, but no fun for the fox) seems to be falling into disuse:

Death knell for hunting ban as police abandon monitoring operations:
"Police forces are to stop monitoring hunts in a change of policy that sounds the death knell for the hunting ban, The Times has learnt."
...
"Richard Brunstrom, Chief Constable of North Wales and the Acpo spokesman on rural affairs, said: “Hunting is definitely not a policing priority. It is not illegal to wear a red coat and ride a horse in a public place.” The new guidance undermines one of the most controversial pieces of legislation introduced by the Labour Government, which took up 700 hours of parliamentary time. Since the Hunting Act came into force in 2004, there have been eight prosecutions, of which only three have been successful, with one pending. Hunting has thrived. Mr Brunstrom said that police had to chose which areas of law enforcement to devote scarce resources to. He said: “If you look at hunting, the penalties do not include a prison sentence for offenders. This puts the Hunting Act to the lower rather than the higher end of offences. Parliament had the chance to include imprisonment as a sentence but did not do so.” "
...
"A spokesman for the League Against Cruel Sport said: “We fought for 80 years for the hunting ban and, while we accept it is not a high priority for police, a ban was the will of Parliament and is the will of the people and we are going to press for more prosecution cases to be brought.” "

See also The hunt ban: a bad law with nowhere to run

More on open source software

I recently wrote about the new take on Open source software proposed by Michael Schwarz and Yuri Takhteyev. Now, while reading David Pennock's reflections on the recent NBER Market Design Working Group Meeting, I followed his link to Paul Graham , on science, art, and engineering, who (in passing) has this to say:

"It seems surprising to me that any employer would be reluctant to let hackers work on open-source projects. At Viaweb, we would have been reluctant to hire anyone who didn't. When we interviewed programmers, the main thing we cared about was what kind of software they wrote in their spare time. You can't do anything really well unless you love it, and if you love to hack you'll inevitably be working on projects of your own."

Graham thus views open source as akin to the scholarly publishing that professors do, which is also uncompensated open source work. Like programmers, we also get rewarded for it in our day jobs.

Second life for Second Life?

One of the most interesting uses of the internet as a place to work and play and buy and sell and advertise was explored by Second Life , a virtual world in which individuals and companies can purchase and develop virtual real estate, and host customers and guests. On Second Life you could have an avatar that represented you personally, and you could develop an island for yourself or your company. Many companies opened islands to see what would happen, and the news agency Reuters opened a bureau in second life. But The Reuters Second Life bureau is now closed, and some of the early enthusiasm for the site has faded.

One reason for this is that the site became increasingly sexualized, and the management is now taking steps to segregate sexual content from other kinds of commerce: Red Lights Might Save Second Life:
"In a move obviously meant to attract more mainstream users to Second Life and salvage some of the realm's lost momentum, Linden Lab will soon be moving mature content to a secondary continent within the virtual world. This has got to be a relief to all those businesses that wasted precious resources building digital offices and outlets in the pixel-based universe over the last few years.
Once touted as an essential locale for hip businesses to open up their doors, Second Life saw something of a real estate boom as companies such as Dell and IBM rushed to build their presence on Second Life's sprawling landscape. But once built, these massive corporate structures turned out to be little more than vast wastes of time and money--gigantic ghost towns in a non-existent gold rush."

The latest news is that it is now possible to take the technology private, and host your own, private Second Life: Second Life Lives Behind a Firewall.
One of the early users of this technology is Case Western Reserve University: Case Western Reserve U. Debuts Private Version of Second Life (for some reason, the isolated version of Second Life is codenamed "Nebraska." ):
"Case Western is the higher-education test site as Linden Lab, the company that runs Second Life, develops the so-called Nebraska version of the virtual world. The concept is to provide all the functions of Second Life, but to let institutions install the platform on their own servers, in their own data centers, and behind their own security systems. The new platform is “completely disconnected from the main Second Life environment,” according to a Second Life blog.
But why would a school like Case, which already has eight islands in Second Life, want to bother with a stand-alone system?
A medical school interested in performing research involving personal medical histories could use a private environment, Mr. Johnson said. Another function would be programs that focus on both adults and kids. Right now, adults need to undergo background checks to access the Second Life teen grid. One use Case envisions for the Nebraska environment would involve the campus Hispanic club providing mentors to Cleveland public-school students in the online virtual world, said Wendy Shapiro, the university’s senior academic-technology officer.
Oh, and another thing: When you host your own universe, you get “God” privileges.
“You can control everything,” said Ms. Shapiro, sounding excited at the prospect. “You can control who comes in, who gets kicked off. You can control whether people walk or fly.”"

Delaying kindergarten entry

The Telegraph discusses the problem of "summer born children," who would be younger than their kindergarten peers if enrolled according to the usual school schedule: Does it pay to delay the start of your child's schooling?. The article focuses on the American experience:

"A survey by the US Department of Education in 2007 found that 14 per cent of children aged 5 to 6 had delayed entry into school, or had parents who planned to delay their entry. In some areas - most often those where parents can afford an extra year of pricey pre-school - the level can reach as high as 25 per cent of the classroom.
The practice is more common among boys and tends to be concentrated in some geographic areas, though nearly absent in others. “Middle-class parents are savvy about wanting to know what the trends are and wanting to make sure that their kids aren't outside the norm,” says one education professor.
That's what comes across in a recent post on a parenting blog from an anxious mother in New Jersey. “I am thinking of holding my daughter back so she is emotionally ready for kindergarten,” she wrote, “but I'm also thinking about it because I worry that she will be the youngest since everyone else is holding back.”
“It's pernicious,” says Morrison, who is concerned, as are many other educators, about the effects on the rest of the student body.
Already, teachers must reckon with children who are 12 months apart in age - a big difference when they are just 5 years old. “On every dimension you can think of, you are going to have kids stretched out along a continuum,” says Beth Graue, a former kindergarten teacher, who studies school readiness at the University of Wisconsin. “You've got to accept that you are going to have gigantic five-year-old girls and tiny five-year-old boys who are going to want to do different things.” When some children begin school a year later than their peers, the range - and the challenge for the teacher - is that much bigger."

If schools are tournaments, this could make sense:
"The notion that small differences in age might make a big difference on the field is familiar terrain to Malcolm Gladwell, The New Yorker magazine writer and bestselling author. In his latest book, Outliers: The Story of Success, Gladwell studied ice hockey teams in Canada, where the game is high on the list of national priorities.
By the time kids are just 9 or 10, they are already being selected for elite teams, extra training and top coaching, and at that young age, those born nearest to the January 1 cut-off date - the oldest in each year's grouping - are usually the best, with the extra few months giving them a real advantage on the ice. With more special attention, that advantage seems to stick: Gladwell found that in any grouping of elite hockey players, 40 per cent were born in the first three months of the year. "

This sounds a bit like the reverse of unraveling, the process by which transactions become earlier and earlier in some markets. That process can feed on itself; if everyone else is recruiting early, maybe you had better do so also. It sounds like holding children back from school entry could potentially have the same dynamic: if the other children will all be a year older, maybe you should hold yours back too, especially if you're raising a future football player...

College admissions essays: who writes them, and who reads them?

In England, as in the U.S., college applications require an essay. In England, as in the U.S., some students hire professional help, some plagiarize from the internet, and many get some advice from teachers and parents. In England, unlike in the U.S., students also have the right to see the letters of reference that their high school teachers write for them.

In reaction to all this, the University of Cambridge doesn't read the essays anymore, and may not pay much attention to the letters of recommendation: Personal statements mean nothing, says Cambridge admissions head.

"Many toil for months, writing draft after draft with care and attention. Some simply cut and paste somebody else’s work from the internet. Others order tailor-made versions online for as little as £24.99.
However they do it, writing a personal statement extolling their virtues and love of study has become a rite of passage for teenagers applying to university.
Now it turns out that many of them need not have bothered.
The University of Cambridge has admitted that it pays no attention to applicants’ personal statements when deciding whom to interview or offer a place.
“With the profusion of companies and websites offering to help draft applicants’ personal statements for a fee, no admissions tutor believes them to be the sole work of the applicant any more,” said Geoff Parks, the university’s straight-talking director of admissions. Much simpler just to ignore them.
“We certainly don’t assign any marks to personal statements,” he added. “I have been told by students after they have been admitted that their schools write the personal statements. Reading a very good personal statement doesn’t tell you anything about the student because you cannot be sure that it’s the work of the person concerned.”
Although the university may use the personal statement as the basis for discussion during an interview, it is not used to judge the student. At all.
Personal references from teachers are also treated with a huge pinch of salt. Now that students can ask to see their references, teachers have stopped saying anything interesting or controversial, Mr Parks suggests."
...
"A survey of 50,000 university applications two years ago — many of them for places on medical sciences courses and at Oxbridge — found that a significant minority of students had plagiarised them from the internet. The giveaway was the 234 applicants who all began their medical school application with the same anecdote about setting fire to their pyjamas at the age of eight."

The head of admissions at Oxford, however, says they still pay attention to essays, to help them distinguish among their applicants more than they can by just looking at grades and standardized exams.

University admissions in the UK

I've been trying to understand the semi-centralized application process for British universities, run by an organization called UCAS (Universities & Colleges Admissions Service).

It offers a common application process through which applicants can apply for up to five programs of study, with some restrictions. For example, "If you are applying for dentistry, medicine, veterinary medicine or veterinary science, you can apply for a maximum of four choices in any one of these subjects." And you can apply to only one of Oxford and Cambridge.

Students apply (mostly) by mid January, and Universities make their decisions in a decentralized way, and mostly report them back to students and UCAS by the end of March. Offers of acceptance may be either unconditional or conditional on the student achieving certain grades in upcoming exams.

Students who receive at least one offer can make a firm acceptance, an insurance acceptance, or decline. A firm acceptance is a commitment to attend (and a firm acceptance of a conditional offer is a commitment to attend if the student's grades meet the acceptance conditions). A student may firmly accept only one offer, but if that offer is a conditional one, may additionally choose to accept an additional offer as an insurance choice:
"You can accept an offer as an insurance choice if your firm choice is conditional. Your insurance choice can be conditional (CI) or unconditional (UI) and acts as a back-up to your firm choice, so if you do not meet the conditions for your firm choice but meet the conditions for your insurance choice, you are committed to that course. "
An insurance choice is also a commitment, and so students are advised that they don't need to make one.

Students are given individualized reply dates, depending on when their last decision from their five applications was received. Offers not accepted by the reply date are considered to have been declined.

Students who don't receive any offers or who decline all of those they do receive may apply to courses that still have vacancies, one additional application at a time, through a process called Extra. And, later in the year (in the summer), students who still don't have places, for example because they didn't meet the requirements of a conditional offer, can apply for vacant places through Clearing.

Here's a newspaper account from last year's Clearing process:
"Clearing fortnight is always an emotional rollercoaster. There are, after all, few sleepless nights to rank alongside the one before you get your hands on that ominous bit of paper showing your A-level results. But if you find yourself facing a column of grades lower than you’d expected, all is not lost: of the 413,000 university applicants given firm places last summer, nearly one in 10 (39,000) secured them through Clearing.
Find your course online
Thanks to the wonders of modern technology, finding a last-minute place has never been easier. Whereas applicants would once have spent days trying to secure a berth at university – waiting for individual prospectuses to reach them in the post, then painstakingly wading through in search of viable substitute courses – the internet has revolutionised this process.
Today everything can be sorted out within hours: a visit to the Ucas online Track service will confirm whether you have scraped in, or have indeed lost your place, while the Clearing website offers a handy A-Z of courses looking to fill vacancies. "

This year, early newspaper reports reflect worries that cutbacks may mean that relatively fewer places will be available at Clearing: Students face chaos with no clearing places.

Piracy and armed merchantmen

Why is this headline such an outlier? Cruise ship opens fire to beat back Somali pirates

One reason is that ship owners are concerned about the longer term effects of escalating the level of violence in their encounters with pirates. But, it turns out, there are some market design reasons too (emphasis added):

"There have been calls for commercial ships to be allowed to carry weapons to deter increasingly bold pirate gangs, who are armed with automatic rifles and often rocket-propelled grenades.
But ships with arms onboard are not allowed to dock at non-military ports.
To bypass this rule, some operators are hiring private security teams who board as the ship enters a risky stretch of water and leave once the danger has passed.
Andrew Mwangura, head of the East African Seafarers' Assistance Programme in the Kenyan port of Mombasa, criticised the Melody for carrying guns.
"There are a number of other methods which can be used to deter the pirates, having weapons on board is dangerous because it raises the stakes for the pirates," he said.
"There is a far higher risk that a crew member of a merchant vessel, or a passenger, could die if the pirates feel they must fight harder to win the ship." The International Maritime Bureau said piracy incidents nearly doubled in the first quarter of 2009, almost all of them off Somalia. There were 18 attacks off the Somali coast in March alone.
Pirates have made millions of dollars from seizing ships and taking crews hostage. A Greek ship was released on Saturday after a £1.3 million ransom was paid.
But just hours earlier a German grain carrier was grabbed in the Gulf of Aden. "

School choice in Belgium and England

School choice remains a hot topic (both academically and politically) in England and Belgium.

Estelle Cantillon will be giving a paper "School Choice Procedures: How They Matter? Theory and Evidence from Belgium," at a June conference in England: School choice in an international context: learning from other countries' experiences .

François Maniquet has written a paper (in French: Inscriptions dans les écoles : quelques enjeux et quelques solutions ) proposing that a centralized choice algorithm using either the deferred acceptance algorithm or top trading cycles should be employed in school choice in Belgium. Here is some coverage in the Belgian press (also in French): D’abord respecter les préférences scolaires; Solution centralisée pour les inscriptions

Fleeting expletives and wardrobe malfunctions: FCC vs Fox Television and CBS

Can television broadcasters, particularly of live events, be fined if the FCC deems some of the language offensive?

"Taboo language," particularly when broadcast over Federally regulated radio spectrum is a contentious class of repugnant transactions. Some of the relevant jurisprudence was discussed in a memorably titled (and clearly and informatively written) article by the OSU law professor Christopher Fairman: "Fuck," 28 Cardozo Law Review 1171 (2007).

There have been some pretty funny "workarounds" to avoid the wrath of the FCC, such as the frequent use of the neologism "frak" on the now-ended tv series Battlestar Galactica.

All this is brought to mind by the recent Supreme Court review of the case FCC v. Fox Television Stations. The FCC derives its authority to regulate language from regulations regarding sexual content. So the question before the court is, when someone like Bono says that an award is "fucking brilliant," does that statement have sexual content? (Judge for yourself, at around minute 5:40 in this video of the 2003 Golden Globes award in which U2's song "The Hands that Built America" won a best song award for the film The Gangs of NY.)

It's entertaining to read a carefully worded NY Times account of the recent Supreme Court decision sending the case back to a lower court. The column, called Gentlemen Cows in Prime Time, doesn't use any of the offensive words, and the title of the column is explained in the text:
"In 1623, the English Parliament passed legislation to prohibit “profane swearing and cursing.” Under that law, people could be fined for uttering oaths like “upon my life” or “on my troth.” In the Victorian era, the word “bull” was considered too strong for mixed company; instead, one referred to “gentlemen cows.” Times change, notwithstanding the fervent wishes of prescriptivists to keep dirty words dirty. "

Another account in plain (Anglo-Saxon) English: You Can't Say That On Television, makes it easier to understand the context of the case.

The Supreme Court also sent back to a lower court the case of Janet Jackson's Superbowl "wardrobe malfunction." The FCC had fined CBS, an appeals court eventually overturned the fine, and now the issue is up for grabs again: Court Sends Janet Jackson Case Back for Review.
"The high court on Monday directed the 3rd U.S. Circuit Court of Appeals in Philadelphia to consider reinstating the $550,000 fine that the Federal Communications Commission imposed on CBS over Jackson's breast-baring performance at the 2004 Super Bowl.
The order follows the high court ruling last week that narrowly upheld the FCC's policy threatening fines against even one-time uses of curse words on live television.
In a statement, CBS said the Supreme Court's decision was not a surprise given last week's ruling and expressed confidence the court will again find the incident was not and could not have been anticipated by the network.
Last year, the appeals court threw out the fine against CBS, saying the FCC strayed from its long-held approach of applying identical standards to words and images when reviewing complaints of indecency.
The appellate court said the incident lasted nine-sixteenths of one second and should have been regarded as "fleeting." The FCC previously deviated from its nearly 30-year practice of fining indecent broadcast programming only when it was so "pervasive as to amount to 'shock treatment' for the audience," the court said.
The FCC appealed to the Supreme Court. The case had been put off while the justices dealt with a challenge led by Fox Television against the FCC's policy on fleeting expletives.
The case is FCC v. CBS Corp., 08-653. "

Open source software

A new NBER working paper discusses the creation of "open source" marketplaces:
Half a Century of Public Software Institutions: Open Source as a Solution to Hold-Up Problem by Michael Schwarz, Yuri Takhteyev #14946 http://papers.nber.org/papers/W14946 (and an ungated version here)

As the title suggests, the paper is about (avoiding) the problem of holdup that would arise if you make a lot of complementary investments in particular software, but are then vulnerable to arbitrary increases in its price. Part of the paper's considerable charm is a long section on the history of open source software (which, because it is not proprietary, avoids much of the holdup problem). Two sections which I excerpt from below concern the 1950's, and the 1960's-'70's.

SHARE and FORTRAN
"Early on, however, IBM also had a different idea for reducing customers’ programming expenses: encouraging the clients to share software with each other. It pursued this strategy by setting up an association for its users in 1952, with a mission of helping IBM customers help each other (CampbellKelly 2003). The association was later renamed “SHARE,” the new name explicitly representing the objective of sharing knowledge and software..."

An early contributor of shared software was United Aircraft:
"To understand United Aircraft’s interest in getting other organizations to use their software for free, and in fact their readiness to put additional resources into modifying it to suit the needs of some of the other SHARE members, we must consider, first of all, that United Aircraft already had an assembly program (UASAP) that it had written for its own needs, and quite likely had made a complementary investment into software written for it. If UASAP were accepted as the standard by other members, United Aircraft could benefit from the future software that other organizations would write for it and at the same time get to keep the software that it had written for UASAP."


ARPANET and Unix
"While modern open source institutions diverge substantially from scientific institutions, both in how they attract external funding and in their handling of credit, they share important characteristics and have clear historical links, the ARPANET project being an important opportunity for a transfer of institutions."

"Among the less successful projects funded by ARPA in 1960s was a new operating system called “Multics.” Multics promised to deliver features that were of interest to AT&T and that IBM had been willing to provide in its software (Ceruzzi 2003, p. 156). AT&T’s Bell Laboratories then joined the Multics project with the hope of accelerating it and steering it closer to AT&T’s needs (Ceruzzi 2003, p. 155, also Salus 1994, p. 26). The Multics project failed, likely due to its excessive complexity. However, a number of Bell Labs researchers produced a simplified version of Multics which they called “Unix.” Unix proved an immediate success."
...
"In 1973 Unix was rewritten in C, a new language also developed at AT&T. While FORTRAN and COBOL had already enabled portability for certain kinds of software, a combination of C and Unix made it possible to write almost any software in a way that would allow it to be moved between computers. Doing so, however, required access to the source code, because different binary software had to be generated for each machine and modifications to the source code were often required. Being able to move software between computers also meant being able to use it on later computers, increasing the time horizons for software users. While much of the software written in 1960s (including all of the ARPANET software) was hardwarespecific and could be expected to become obsolete eventually, most of the software written for Unix in 1970s can be used today. Increased time horizons made access to source code even more important, as some users could now plan to use their software for decades."

The paper goes on to trace how changes in copyright law and the rise of cheap personal computers influenced the open source movement, including the marketing effort that led to the name "open source" replacing "free software".

Auctions of airport slots: dead in the water, again.

The latest news on plans to auction off takeoff and landing slots at NY's LaGuardia airport: DOT scraps auction plan for NYC airports .

NYC's airports are the most congested in the nation, but plans for an auction have been politically troubled from the start (see some of my related earlier posts). What is the nature of the politics? Perhaps some of the airlines that fly in and out of NYC airports actually like the congestion, since it keeps out new competition by preventing airlines that don't presently have any slots from getting any.

Freakonomics has a non-auction suggestion for relieving the congestion: Shut Down LaGuardia.

Non-simultaneous trades in basketball

One of the pleasures of market design--a pleasure it shares with good gossip--is being able to explore in detail the rules by which other people live. The NBA Salary Cap FAQ is full of such details.

It turns out that some details involved in managing an NBA team have something in common with the non simultaneous kidney exchange chains I recently blogged about. This is because NBA teams can exchange players, but the Salary Cap imposes some constraints:

What are the rules regarding trades?
"Teams under the salary cap may make trades as they please, as long as they don't end up more than $100,000 above the salary cap following a trade. But if a team is over the cap, or they are under the cap and a trade would take them more than $100,000 over the cap, then an exception is required. An exception is the mechanism that allows a team to make trades or sign free agents and be over the salary cap. Since teams are usually over the salary cap, trades are usually accomplished using exceptions."

What is the Traded Player exception?
"The Traded Player exception is the primary means used by teams over the cap for completing trades. It allows teams to make trades that leave them over the cap, but it places several restrictions on those trades. Trades using the Traded Player exception are classified into two categories: simultaneous and non-simultaneous. As its name suggests, a simultaneous trade takes place all at once. Teams can acquire up to 125% plus $100,000 of the salaries they are trading in a simultaneous trade. For example, a team trading a $5 million player in a simultaneous trade can receive one or more players whose salary is no more than 125% of $5 million, plus $100,000, or $6.35 million in return.
A non-simultaneous trade may take up to a year to complete. "

What is a non-simultaneous trade?
"A trade in which more than one player is traded away can only be simultaneous; non-simultaneous trades are allowed only when a single player is traded away (although teams can sometimes find ways to configure multi-player trades as multiple single-player trades which are non-simultaneous).
Here is an example of a non-simultaneous trade: a team trades away a $2 million player for a $1 million player. Sometime in the next year, they trade a draft pick (with zero trade value itself) for a $1.1 million player to complete the earlier trade. They ended up acquiring $2.1 million in salary for their $2 million player -- they just didn't do it all at once, or even necessarily with the same trading partner.
In the above example, after the initial trade of the $2 million player for the $1 million player, it was like the team had a "credit" for one year, with which they could acquire up to $1.1 million in salaries without having to send out salaries to match. ....
"Here is a more complicated example of a legal non-simultaneous trade: a team has a $4 million Traded Player exception from an earlier trade, and a $10 million player it currently wants to trade. Another team has three players making $4 million, $5 million and $7 million, and the teams want to do a three-for-one trade with these players. This is legal -- the $5 million and $7 million players together make less than the 125% plus $100,000 allowed for the $10 million player ($12,600,000), and the $4 million player exactly fits within the $4 million Traded Player exception. So the $4 million player actually completes the previous trade, leaving the two teams trading a $10 million player for a $5 million and a $7 million player. From the other team's perspective it's all just one big simultaneous trade: their $4 million, $5 million and $7 million players for the $10 million player. "

HT Steve Leider (who we're trading, non-simultaneously, to Michigan next year)

Organs for transplant in Japan

The London Times reports on the shortage of transplantable organs in Japan, where deceased donation is very limited due to the legal requirement of cardiac death. The article is about future possibilities of cloning human organs in sheep. Nearer at hand, the article describes how the organ shortage in Japan is made more serious by the decreasing availability of organ transplants overseas, through growing restrictions on "transplant tourism": Japanese scientist claims breakthrough with organ grown in sheep:

"The reason for Professor Hanazono’s sense of urgency — and for the entire organ harvest project being undertaken at the Jichi Medical University — lies many miles away in Tokyo and with a historical peculiarity of the Japanese legal system.
Japan defines death as the point when the heart permanently stops. The concept of brain death — the phase at which organs can most effectively be harvested from donors — does exist, but organs cannot be extracted at that point.
The long-term effect of the legal definition has been striking: organ donation in Japan is virtually nonexistent, forcing many people to travel abroad in search of transplants. In the United States, the rate of organ donors per million people is about 27; in Japan it is under 0.8.
The effect, say paediatricians, has been especially severe for children. The same law that discounts brain death as suitable circumstances for organ donation broadly prevents children under 15 from allowing their organs to be harvested.
To make matters worse, international restrictions on transplant tourism are becoming ever tougher, making Japan’s position even more untenable. To avert disaster, say doctors, Japan either needs the science of synthetic organ generation to advance faster than seems possible, or it needs a complete rethink on the Japanese definition of death. "

Market for concierge health care

Is it hard to get an appointment with your doctor, who must see patients every fifteen minutes? Perhaps you are in the market for concierge health care (as described in these two stories, one from 2005 and one from this past Sunday):
For a Retainer, Lavish Care by 'Boutique Doctors'
Despite Recession, Personalized Health Care Remains in Demand

"One promise made to patients paying for concierge service is that waiting will not be a part of their health care experience. Patients are guaranteed that phone calls will be returned promptly, appointments will be scheduled on a same-day basis if necessary, and appointment times will be honored. ...
"A relatively simple tradeoff is responsible: the extra fees collected from patients let concierge doctors, who leave regular practice for concierge medicine, slash their caseloads. Before Dr. Kaminetsky became a concierge doctor five years ago he had 2,500 patients in his practice - a standard number for most primary care internists. His list now numbers 600. "

"The practices typically charge at least $1,500 a year, with the most elite services asking $25,000 or more per family. The fees cover a thorough physical exam and enable physicians to limit the number of patients they see so they can provide premier service. "...

"Critics of concierge medicine consider it elitist and say it has widened the already significant class disparities in American medicine. They also say it has exacerbated the shortage of primary care physicians by leaving more patients to be treated by a shrinking pool of doctors.
But advocates counter that the concierge movement reflects deep exasperation with the two-hour waits and 10-minute appointments of conventional primary care. Given the burnout among physicians who must see more than two dozen patients a day, they say the concierge model may sustain doctors who would otherwise hang up their stethoscopes.
Dr. Thomas W. LaGrelius of Torrance, Calif., who leads the Society for Innovative Medical Practice Design, a professional association of concierge physicians, estimated that there were 5,000 such doctors in the United States, out of an estimated 240,000 internal medicine physicians and related subspecialists. "

Horse meets versus horse meat

The question of Why can't you eat horse meat in the U.S.? takes on special force when the horses in question are retired race horses. The NY Times reports that the slaughter of such horses for human consumption arouses special repugnance.
The article Ignoble Endings Far From Winner’s Circle reports(emphasis added):

"The most significant source of racehorse deaths is the slaughter industry, one driven by overbreeding and demand from the lucrative global meat market. According to the American Society for the Prevention of Cruelty to Animals, more than 100,000 American horses are slaughtered each year in Canada and Mexico to satisfy horse meat markets in Europe and Asia.
The slaughter of domestically bred horses represents a breach of the American covenant between horses and humans: horses bred for sport, industry and agriculture are not part of our food chain. They are not supposed to meet death in a slaughterhouse."
...
"Many owners, faced with the choice of keeping retired horses and continuing to pay for their feed and care, instead opt to sell them at auction for $300 to $500 a horse, not realizing or not caring that if they are exported they can eventually be slaughtered.
“We’ve got lots of work to do here,” Waldrop said. “The problem is far from being solved. There is a high demand for horse meat around the world, and they create a market for horses that competes with our efforts to adopt and retrain these horses.”
The last of the horse slaughterhouses in the United States were shut down in 2007. But at least four states — Montana, Illinois, North Dakota and Tennessee — have either proposed or contemplated legislation to reintroduce horse slaughter. Two bills stuck in committee in the House and the Senate would make it illegal to transport horses across state lines or to foreign countries for the purpose of slaughter. The industry should push Congress to pass pending anti-slaughter legislation."

In a related story, concerned with wild horses also, see Pickens Once Raced Horses, Now Works to Save Them

HT: Muriel Niederle

Market for adultery, in a recession

In an earlier post, I mentioned a website that caters to married people seeking an affair. It turns out that the business is countercyclical:
Adultery business cashes in on world's recession worries
"At the Ashley Madison agency, which revels in the motto, "Life is short. Have an affair," the global economic downturn is proving a boon for business. "

"Membership has soared from one million to 3.6 million in just 12 months, and he expects another surge after the company launched a service allowing members to access the site from their mobile phones. The innovation is aimed at would-be cheaters who are nervous about leaving evidence of their infidelity on their computer at home or work.
Mr Biderman said that many couples who would otherwise have divorced were seeking affairs at the moment because of the cost of hiring lawyers and the difficulty of selling the marital home. "