London Times reports on ads to sell kidneys

Despite the headlines, it isn't clear that they found any actual cash-for-kidney transactions, or the infrastructure to support them, but the willingness is there: Cash-strapped sell their kidneys to pay off debts.

"British victims of the credit crunch are offering to sell their kidneys for £25,000 or more to help pay debts, an investigation by The Sunday Times has revealed.
At least a dozen adverts have appeared on the internet offering kidneys for sale from British “donors”. Five of the sellers corresponded with undercover journalists, who posed as friends and relatives of sick patients to negotiate sales."
...
"Both men said they wanted to help those in need of kidney transplants at the same time as relieving their financial difficulties. A leading doctor said the phenomenon highlighted the need for a public discussion of the issue of selling organs.
Professor Peter Friend, a former president of the British Transplant Society, said: “The West has outlawed it for all sorts of good reasons, but the result is it goes underground. It is really important to have a debate.” Nearly 7,000 people in the UK are waiting for kidney transplants and 300 died last year while on the waiting list.
Offering to sell an organ in England, Wales and Northern Ireland is an offence under the Human Tissue Act even if the seller is planning to travel to another country for the transplant operation. "

Where burial societies go to die

The NY Times has a story on burial societies, cooperatives set up by immigrants in the 1800s and early 1900s to buy and maintain cemeteries. Membership came with burial rights. But the members of the remaining burial societies are aging, and as the society administrators die, it is hard to find replacements: With Demise of Jewish Burial Societies, Resting Places Are in Turmoil .

Various public agencies have gotten involved, e.g. in NY, the New York State Division of Cemeteries exercises general supervision over cemeteries, while the New York State Insurance Department supervises insurance companies. A burial society is both. The Insurance Department's Liquidation Bureau protects consumers who hold policies with failed insurance companies, and its office of Miscellaneous Estates has taken over the administration of some of the burial societies, until their last members are buried.

"Mark G. Peters, who heads the quasi-public Liquidation Bureau...said the government viewed burial societies as a type of insurer. “They may be a historically anachronistic insurance product,” he said, “but we are essentially the only safety net for people still depending on these societies.” "

At a time when the appropriate role of regulators for a variety of markets, including insurance markets, is under new scrutiny, it's reassuring to hear of a fairly unobtrusive regulator stepping up to do the job for which it was designed.

Common deadlines

One way to try to control unraveling of transaction dates is to specify, and try to enforce, particular times at which certain aspects of a market are allowed to unfold. Some examples:

National Letter of Intent for college athletic recruits: A Quick Reference Guide to the NLI

NALP Principles and Standards for hiring by law firms: PART V: GENERAL STANDARDS FOR THE TIMING OF OFFERS AND DECISIONS "Employers offering full-time positions to commence following graduation to candidates not previously employed by them should leave those offers open for at least 45 days following the date of the offer letter or until December 30, whichever comes first. Offers made after December 15 for full-time positions to commence following graduation should remain open for at least two weeks after the date of the offer letter. "

It turns out that this provision needs some enforcement in a recession. The AmLaw Daily reports: S&C vs. Harvard and the Relevance of NALP's 45-Day Rule
"Perhaps nothing epitomizes the anxiety of this recruiting season better than Sullivan & Cromwell's abandoned attempt to bypass a standard, set by NALP, that firms leave offers to students open for up to 45 days. In late July, S&C called several of the nation's top law schools and informed career services personnel at those schools that the firm would not be following the 45-day guideline, according to six sources with direct knowledge of the situation. All six spoke only on the condition that they not be identified publicly. Instead, S&C told the career services personnel, the firm would require prospects to respond yes or no in two weeks."... "S&C backed down quickly and promised to obey the 45-day standard, according to all six sources who spoke to us about the matter. But that doesn't mean the 45-day guideline is set in stone. James Leipold, executive director at NALP, says several firms (none of which he would name) have called the organization asking if they could skip the 45-day rule in some way this season. Several have asked for permission to keep offers open for 45 days or until they collect as many acceptances as they want--whichever comes first. "

Even theoretical physicists need to try to control their market: Theoretical High Energy Physics Groups Common Deadline for Postdoc Offers, signed by many physics departments in 2007.

My favorite is the April 15 resolution by the Council of Graduate Schools, signed by most universities, which is carefully designed to be fairly self-enforcing:
"Students are under no obligation to respond to offers of financial support prior to April 15; earlier deadlines for acceptance of such offers violate the intent of this Resolution. In those instances in which a student accepts an offer before April 15, and subsequently desires to withdraw that acceptance, the student may submit in writing a resignation of the appointment at any time through April 15. ... It is further agreed by the institutions and organizations subscribing to the above Resolution that a copy of this Resolution should accompany every scholarship, fellowship, traineeship, and assistantship offer."

Note that the incentive to violate the agreement by insisting that applicants respond before April 15 is undercut by the fact that the resolution allows students to accept such offers, and then subsequently reject them if they get a better offer. That is, the resolution effectively de-fuses Exploding offers by making them non-binding.

Entrepreneurial Market Design

In the coming weeks, I'll be making a series of posts on a subject I term Entrepreneurial Market Design, the study of creating for-profit marketplaces. Such marketplaces often require innovations (market rules, information flows, timing adjustments, reputation mechanisms) to resolve longstanding inefficiencies (lack of market thickness, adverse selection, high transaction costs, etc). These innovations can create significant value for market participants, and at the same time offer a promising business model for the entrepreneur.

I've had the opportunity to study many such markets, in the capacity of academic researcher, case author, and advisor to students who are have started market-based businesses. The first set of markets I'll list are those founded or managed by recent HBS students with whom I've interacted. Future posts will go into greater detail on these.

TeachStreet. TeachStreet is a platform for matching students with classes, usually in a non-academic setting. Instructors of classes ranging from foreign language to cooking to SAT prep to belly dancing post listings on TeachStreet.com. Users browse through classes and sign up, and Teachstreet takes a commission for each new student. Julie Sandler, a current HBS student, is currently investigating how to expand to the platform to include children's classes. www.teachstreet.com

RelayRides. Concisely described as a peer-to-peer version of Zipcar. Car owners sign up to make their cars available for rental, naming their own rates and hours. Renters select from available cars. In theory, prices could be lower than in Zipcar and fleet size could be much larger. This looks like a classic two-sided network, but with some intriguing challenges of insurance, monitoring, and adverse selection. The founders are HBS students Shelby Clark and Nabeel Al-Kady. http://www.relayrides.com/check-zip.cgi?zip=21202&x=10&y=16

ClearMechanic. ClearMechanic is a platform to better connect auto mechanics with their customers. In an industry often considered technologically backward and rife with trust problems, ClearMechanic is meant to offer transparency and online accessibility to auto-owners. Using ClearMechanic, customers can go online to see the where their repair is in the work queue, learn about the repair being done, and interact with the repair shop. It also serves a marketplace for complementary products, such as accessories, insurance, repurchase options. The founder and CEO is Brad Simmons, a former student of my MBA class Managing Networked Businesses. www.clearmechanic.com

VigLink. VigLink is a startup that describes itself publicly as “building a unique platform for the real-time optimization of affiliate marketing." The founder, Oliver Roup is a recent HBS graduate and former student of Managing Networked Business. www.viglink.com

Cork'd. Cork'd is a social network for wine lovers. The founder is wine celebrity Gary Vaynerchuk, and the CEO is Lindsay Ronga, a former student in Managing Networked Businesses. Among other goals, Cork'd would like to match users with their favorite wines. www.corkd.com

SaleAwayWithMe. SaleAwayWithMe is a website that offers users customizable notifications about sales from their favorite brands. SaleAwayWithMe differentiates itself from spammy newsletters in that specific brands can be chosen, their sales are consolidated into a single list, and users can set thresholds (e.g. only include the most popular notices, such as sale notices that XX% of recipients click on.) SaleAwayWithMe is in a very early state, and was founded by former HBS student Sumir Meghani. www.saleawaywithme.com

I've recently spoken with all of the founders/managers of these companies, and each is willing to work with students who choose to study the business as part of the class project.

Nagel's guessing/beauty contest game: a famous experiment in game theory

Much of game theory concerns how ideally rational players should behave when they interact with other ideally rational players, when everyone's rationality and information is common knowledge. Practical market design, of course, has to also concern itself with how games will be played among humans, which is one of the reasons experimental game theory (and experimental economics generally) is such a useful tool, as a complement to game theory.
An important 1995 paper in the AER by Rosemarie Nagel (“Unraveling in Guessing Games: An Experimental Study") reported an experiment in which this tension was made very clear. In one form of the game, a large number of people are asked to pick a real number between 0 and 100, and the winner will be the person who picks the number closest to 2/3 of the median of all the numbers chosen.
This game shows off the tension between playing a game with perfectly rational players and playing the same game with a sample of humans, even if you are perfectly rational yourself. If all the players are perfectly rational, no one will ever choose a number other than 0, and this is the only equilibrium. (You can prove it this way: no matter how close the median number chosen is to 100, 2/3 of 100 will be closer to 2/3 of the median than will any higher number, so no rational player will ever choose a number larger than 66.66. So the median number chosen in the world of all perfectly rational players will never be higher than 66.66, and so 2/3 of the median will never be higher than 2/3 of 66.66, and so no rational player will choose a larger number, and so forth: in the world of all rational players, no one chooses any number larger than 0.
But of course, among humans, many people do choose numbers larger than 0, and so if you cleverly choose zero, you will know that you are smarter than they are, but you won't win the game. The game will be won by someone who chose a positive number nearest to 2/3 of the median. Maybe someone who chose a number near 2/3 of 66, or 2/3 of 2/3 of 66... And indeed that has been the case, with the modal number chosen dropping as players gain experience. Many experiments have followed that original 1995 experiment, some conducted in newspapers among thousands of participants. (Here are the slides I presented about that series of experiments in the first lecture of my Experimental Economics course this past Spring.) A recently reported experiment was among chess players, who turn out to be a lot like humans: Six thousand chess players took part in a beauty contest! By Christoph Bühren and Björn Frank, University of Kassel. (See also Jeff Ely's nice account here: Grandmasters Play the Beauty Contest Game)
One of the things that struck me about the report by Bühren and Frank was that they include A historical note on the Beauty Contest. They trace the game back to a 1981 French puzzle magazine, which, astonishingly, also seems to have run a large scale experiment among their readers:

"In 1981, the French magazine "Jeux & Stratégie", a popular magazine devoted mainly to strategic board games, but also covering card games and mathematical games, arranged a big readers' competition consisting of mathematical puzzles but also problems from games such as chess, bridge and go. Ledoux (1981) reports on almost 15,000 participants, 4,078 of them being ex aequo, hence the winner had to be decided in a playoff. All first round winners received a letter with new puzzles, and to avoid another round with multiple winners, chief editor Alain Ledoux invented in the last question of this letter what is today known as the Beauty Contest (the name given to it by Ledoux, according to an email to us from July 9th, was “psycho-statistique”, although this does not appear to have appeared in print). Readers were asked to state an integer between 1 and 1,000,000,000, the winning number being the one closest to two third of the average! The average turned out to be 134,822,738.26, two third of this being 89,881,825.51. This is 8.99 percent of the maximum number, markedly less than what is typically found in first rounds of Beauty Contest experiments. However, as explained above, the participants had been pre-selected, having solved a series of puzzles in the first round of the contest, and they knew that everyone else was pre-selected. Both facts should result in the pretty high depth of reasoning."


Scientists and scholars spend a lot of effort tracing back "first" discoveries, and this one is a great find. Nagel's original paper already referred to the fact that the great game theorist Hervé Moulin discussed the game in one of his books, and elaborated on the dominance solvable structure underlying the proof I sketched above. (It was this iterative-reasoning structure that Nagel's original experiment was designed to investigate, and the game has found wide use since then for that purpose, see e.g. the 2006 AER paper by the two (now) British economists Miguel Costa Gomes and Vincent Crawford, "Cognition and Behavior in Two-Person Guessing Games: An Experimental Study". The two-person games have a simplicity that lets alternative hypotheses be more easily separated, in this connection see also the 2008 GEB paper by Brit Grosskopf and Rosemarie Nagel, "The two-person beauty contest. )

Of course, it often happens that, once an important contribution is made and understood and disseminated and built upon, prior discoveries are uncovered. It's good to rediscover earlier attempts, that may have been forgotten because they were "before their time", i.e. because they didn't lead to a lasting scientific or cultural conversation when first proposed.

I once wrote about this as follows:
"Columbus is viewed as the discoverer of America, even though every school child knows that the Americas were inhabited when he arrived, and that he was not even the first to have made a round trip, having been preceded by Vikings and perhaps by others. What is important about Columbus' discovery of America is not that it was the first, but that it was the last. After Columbus, America was never lost again..." (Roth and Sotomayor 1990, p. 170):

(In a similar vein, Jack Rosenthal, writing the On Language column in the NY Times Sunday Magazine, speaks of "...Stigler’s Law of Eponymy, which states that any scientific discovery named for someone is not in fact named for its actual discoverer. ...Stephen Stigler, the University of Chicago statistician who proposed the law in 1980, attributed it to the sociologist Robert Merton, who suggested something similar in 1968.")

Some final notes (for those of you who have followed to the end of this long post).

Stigler's Law might equally well be applied to the name of Nagel's experimental game. She initially called it a "guessing game," but also referred to Keynes' famous metaphor about investing in the stock market
""[P]rofessional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view."

This isn't a perfect analogy to the guessing game; as Nagel suggested, if the goal were to pick the average number (instead of 2/3 of the average), the game would be as difficult for perfectly rational players as for humans, since there would be a continuum of equilibria. But the "beauty contest" name has stuck. As it happens, there's another important family of experimental games, introduced in a 1990 AER paper by John B. Van Huyck, Raymond C. Battalio, and Richard O. Beil, "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure" that is much closer to Keynes' beauty contest.

The Nagel paper also has "unraveling" in the title, which refers to the sense in which the "p beauty contest game" with p less than 1 is a reduced form model of the kind of unravelling we see in labor markets and other kinds of markets, e.g. in which employers sometimes try to be earlier than their competitors, with a resulting race to the bottom.

Full (and proud) disclosure: back in the previous millenium, Rosemarie was a postdoctoral fellow of mine, at the University of Pittsburgh, 1994-5. She suggests I mention that her initial inclination to do a careful experiment on this game came from considering her own thought processes when playing the game, and that "one should participate in many experiments when being or wanting to become an experimenter..."

College admissions in Illinois

The long running story about politically connected candidates getting preferential admissions at the University of Illinois reached some sort of (perhaps interim) conclusion today: U. Of Ill. President Resigns After Scandal
"CHAMPAIGN, Ill. (AP) -- University of Illinois President B. Joseph White, who has been at the center of an admissions scandal, has resigned.
... White has been under fire since this summer over reports that the university admitted politically connected students over more qualified ones at its Champaign-Urbana campus."

The market for college athletes

Putting the Amateur Myth to Rest by Allen L. Sack

"I agree with Brand that the term amateur is not a good fit for modern college sports, but it has definitely not outlived it usefulness for the NCAA. The myth of amateurism shields college sport from tax collectors and members of Congress, seeking unrelated business income taxes, and allows the NCAA to cap athletic subsidies at room, board, tuition and fees. The NCAA will probably play the “amateurism card” to fight a class action lawsuit filed this summer over its use of former athletes’ likenesses to sell licensed products.
So what can the NCAA do to end the pretense that big-time college athletes are amateurs, short of abandoning athletic scholarships or openly turning pro? The first step is to take Brand’s “off the cuff” suggestion seriously and drop the term amateur when referring to scholarship athletes.
The next step would be to adopt a model that continues the practice of awarding athletic scholarships to the nation’s most talented athletes, but eliminates conditions generally associated with employment. Borrowing a term from Myles Brand, I would call this the “collegiate model.”
Under current NCAA rules, athletes who fail to meet athletic expectations can lose their athletic scholarships, i.e., be “fired” at the end of the year, thus transforming athletic scholarships into contracts for hire. And because athletes are subject to their coaches’ control in return for payment of room, board, tuition and fees, they arguably meet common law definitions of employees. The collegiate model, on the other hand, would make satisfactory progress in the classroom the condition for renewing athletic scholarships. "

Books on demand (Espresso in the Square)

The Harvard Crimson reports on a new dimension to the book market in the age of the internet, books printed on demand (and delivered by bicycle:): Store Launches On-Demand Books

"Starting next week, customers at Harvard Book Store will be able to buy in minutes books that once would have taken weeks to find. The service comes courtesy of the Mass. Ave. retailer’s new printing machine, which will make it the first bookseller in the nation with the ability to print 3.6 million titles on demand. The Espresso Book Machine—produced by New York-based firm On Demand Books—has been rolled out to a select few stores to date, but the one at Harvard Book Store will be the first with access to the 2 million public-domain texts digitized by Google, which also announced a deal with On Demand last Thursday. "
...
"The Espresso Book Machine will be able to print a 300-page paperback book in four minutes, according to Gain, who added that printed books will be competitively priced and indistinguishable from those sitting on the shelves. Customers will be able to request a book to be printed online or in the store, after which they can either pick it up in-store within minutes or have the book delivered by bicycle either the same or next day. Books can also be shipped to domestic or overseas locations. "

Another step in the unraveling of the baskeball market

In a further unraveling of the market for basketball players, Jeremy Tyler, 18, "became the first player to drop out of high school to play basketball professionally outside the United States." Here's an early story: High School Star to Play Professionally in Israel.

The deal with Macabee Haifa has since been finalized, and InsideHoops.com editor says: So instead of being surrounded by little kids on a HS basketball court, Tyler will make 140k and play with adults he can actually learn from. And then instead of being a college freshman a year later, he’ll probably do the same, perhaps for a bit more money. So he’ll have earned a quarter million dollars or so in two years before most players earn a penny (aside from the under the table stuff that just about every good young player gets). The thing is, I don’t think an overseas team is going to go out of their way to train him more than they would any other player, considering he’s only committed to be there for one year. Still, he should at least get way more out of being there for a year than he would as a HS senior."

And, it's not just basketball: here's a story from the Cleveland Plain Dealer on both Tyler and baseball star Bryce Harper: Teens turning pro? Their choice

"Baseball player Bryce Harper of Las Vegas and basketball player Jeremy Tyler of San Diego have found ways to manipulate their sports' entry-level restrictions and turn pro early, much the same way Bernie Kosar did in 1985 when he graduated two years early from Miami and entered a supplemental draft so the Browns could take him. "

Unraveling in junior tennis:

Not only do the most competitive tennis players have to start training while young, they have to train more intensely than is compatible with attending school: The Career Path to Pro Tennis Often Passes High School By

"American junior tennis has had a major change in the last five years. Aspiring pros now commonly abandon regular school for home or online educational programs. Although alternative schooling is not new to junior athletics, tennis is perhaps the only sport whose full participation requires it because of year-round competition and travel. "


Apparently the issue is that tennis players are ranked in part by the number of tournaments they do well in, so they have to play in lots of tournaments.

Regulating fast trading on Wall St

David Silver has a nice article in the NYT comparing the proposed regulation of "flash trading" with some of the century old regulation of floor trades (and of "front running" before customer orders generally): A Short History of Fast Times on Wall Street . ("Flash trading":= Some exchanges have, for a fee, given some traders "pre-routing display" of bids and asks milli-seconds before they are shown to most traders. See Direct Edge.)

"Supercomputers allow certain traders to profit by executing trades in milliseconds, a practice known as high-frequency trading. These traders also use a technique called flash orders that gives them a sneak peek at other investors’ orders to buy and sell stock. ...

"...similar criticisms have been made for over 100 years, since the days when trades on the New York Stock Exchange were executed by humans using notepads and pencils.
Even back then, critics claimed that the exchange members who were physically present on the floor could get trading information and execute their own orders faster than anyone else. The creation of the Securities and Exchange Commission in 1934 included the power to regulate the buying and selling of securities by exchange members trading for themselves, rather than for customers.
A Roosevelt administration official testifying in support of the 1934 legislation, Thomas Corcoran, described such floor traders as “chiselers.” This referred to their ability to quickly buy from sellers at prices lower than they would otherwise get, and promptly resell to buyers at prices higher than they would otherwise pay.
These complaints were well founded. By being on the exchange floor, traders could see with their own eyes the prices of completed trades minutes before they appeared on the exchange tape. Executing their own orders gave them a head start over ordinary investors, whose orders could take minutes to reach the floor. As a former Wall Street Journal editor wrote in 1903, “They know the prices even before they are recorded on the tape, and they are able to join in every upward movement the moment it begins, and to abandon it the moment it shows signs of wavering.”
In 1909, a committee created by Gov. Charles Evans Hughes of New York to study stock market abuses similarly commented that floor traders “acquire early information concerning the changes which affect the values of securities,” giving them “special advantages” over other traders. "

Market for (smuggled) cultural treasures

Trading in certain kinds of antiquities and "cultural treasures" is regarded as a repugnant transaction in many parts of the world, and governments seek to prevent it in various ways. (For example, France sometimes exercises a right to "preempt" auctions of art it deems important, essentially by exercising a right of first refusal (see footnote 3 in the linked paper). Many countries make exports of certain kinds of "cultural treasures" illegal.


Ray Fisman and Shang-Jin Wei have a paper that attempts to measure how often such laws are flouted (by comparing export declarations and U.S. import declarations--not everything that is illegal to export is illegal to import). It's called "The Smuggling of Art and the Art of Smuggling: Uncovering the Illicit Trade in Cultural Property and Antiques ," AEJ-Applied Economics, 1,3,2009.


It turns out that the level of illegal exports from a country is correlated with how often its UN diplomats violate NYC parking regulations.

Cent mail: signalling that your email isn't spam

Here's a new twist (from Yahoo! Research) on paying to send email as a barrier to spam: a 1 cent donation to charity for each email buys you an encrypted stamp that assures the recipient that you paid: Pay-per-email plan to beat spam and help charity.

"Yahoo! Research's CentMail resurrects an old idea: that levying a charge on every email sent would instantly make spamming uneconomic. But because the cent paid for an accredited "stamp" to appear on each email goes to charity, CentMail's inventors think it will be more successful than previous approaches to make email cost. They think the cost to users is offset by the good feeling of giving to charity."

"Some previous schemes, such as Goodmail, simply pocketed the charge for the virtual stamps. Another deterred spammers by forcing computers to do extra work per email; and Microsoft's version requires senders to decipher distorted text."

Here's an earlier post.

Here's another story: Will Users Donate a Penny Per Email to Fight Spam, Yahoo Wonders, which notes
"It’s not clear how much the proposal would help, however, since so much of the spam is now sent using botnets, which are networks of zombie PCs whose owners have no idea their computers are part of a massive spamming organization."

Congestion in online job search

Companies that post job openings online get access to many resumes, but may have trouble sorting through them. Phyllis Korrki writes: Where, Oh Where, Has My Application Gone?
"GETTING a rejection letter is a painful part of job hunting, but at least it means you’ve been noticed. These days, I’ve been hearing about more job hunters who respond to online job postings, only to hear nothing back from the company. Ever."
"...before you get too angry at companies that ignore you, consider what they are up against.
First, the Internet has made it absurdly easy to apply for jobs. This means that unqualified people are clogging the system with their wing-and-a-prayer applications.
Then add rising numbers of unemployed people. More job seekers — qualified, unqualified and desperate — are hitting the send button. Acknowledgments are going by the wayside as recruiters confront hundreds of applications for a single job.
In fact, organizations received 75 percent more applications, on average, in the first half of 2009, compared with the same period in 2008, according to a survey by the Corporate Executive Board, a network of executives and a research company. "

How about business-oriented social networks liked LinkedIn, in which people can recommend each other?
" "Obtaining an employee referral is a good move, as far as it goes. There is just one problem: Nowadays “the referral channel is jammed in the same way that other channels are jammed,” Mr. Safferstone said."

A fast auction for gift cards

TC50: Gift Card Auction Site Rackup Aims To Shake Up Market
A "fast auction" in which the high bidders buy themselves gift cards and compete for bonus amounts on the card, so that different cards sell at different discounts.
"Rackup’s team is lead by Marc Rochman and is supported by a board that includes Stanford Prof. Paul Milgrom, one of the most prominent experts in auction theory, and Duke Prof. Dan Ariely, author of “Predictably Irrational”. The company raised early-stage funding from the founders and some private investors, amounting up to $3.5 million."

HT: Joshua Gans

Law firm recruitment, rescinded offers, etc.

Law firm recruitment begins with the recruitment of summer associates, many of whom are traditionally made offers for permanent employment starting the next year (a tradition that has been somewhat disrupted by the recession, which has led to both the withholding of offers and sometimes to their subsequent cancellation or postponement). How might this affect the norms, customs and rules by which recruiting is conducted? (The organization that tries to foster these norms and rules, through a statement of principles and standards, is NALP, formerly known as the National Association for Law Placement.)

Last year, the blog Above the Law urged students holding multiple summer offers to accept one quickly: Accept Your Offers: Stop Screwin' Around You Kids Screw Around Too Much.
"If you are a 2L sitting on multiple offers, could you please -- for the love of God -- accept one of them already, so the spots you don't want can be filled by other candidates? ... And it might be in your best interest as well. The career services office at U. Penn Law School sent around a letter to students today, urging them to make a decision:
We recommend that you do not wait until the expiration of the offer to render a decision... Wednesday, we learned that one of your 2L colleagues had their offer for employment rescinded before the expiration of the offer because the firm experienced a higher than usual acceptances from outstanding offers..."

This year, Above the Law suggests (tongue in cheek?) Accept Your Offers: All of Them.
"It seems to me that the "social compact" between firms and students has completely broken down. We've been living in a Hobbesian state of nature for almost a year now.
NALP tells students that they should not hold more than two offers open, or else. Or else what? As Jim Leipold, executive director of NALP, recently observed, "There are no NALP police."
As far as we know, NALP hasn't done anything to firms that have disrespected the 45-day "open offer" period. What are they going to do to students that accept more than two offers?
We asked NALP these questions directly. We asked why a student should be willing to follow the NALP guidelines when firms have flouted them with impunity during the recession. We asked why students should adhere to NALP guidelines when law school deans are saying that the firms will not.
We received no response. So now we're asking you:
Shouldn't an intelligent 2L accept every offer of summer employment he or she gets? If some firms revoke that offer quickly, so what? It's probably a firm you don't want to summer with anyway.
Once you've decided which firm to go with, you can politely decline the other offers you accepted..."

While I think that reputational concerns will prevent law students from accepting multiple offers, there is obviously a great deal of justified concern when law firms make offers and then rescind them (we're not just talking about summer offers now). Here is NALP's statement on rescinded offers (which begins "Please note: NALP's Principles and Standards do not condone rescinding offers. However, in recognition that rescission does occasionally occur, NALP presents this article with suggestions for ameliorating the situation. ")

NRMP to implement "managed scramble"

After the medical match, some applicants and positions remain unmatched. Right now, that is handled through a fairly decentralized "scramble." (Fairly decentralized, but with some centralized distribution of the information about who is matched and unmatched. It is more centralized than the economics job market scramble, since the NRMP knows immediately who all the unmatched applicants and participants are). Giving the medical scramble some more structure is now under active consideration.

"The NRMP Board of Directors, meeting in Washington, DC on May 4, 2009, voted to proceed with implementation of a "managed" Scramble for the Main Residency Match. A joint NRMP-AAMC work group will continue to refine the plan, which will require programs to offer and applicants to accept unfilled positions through the NRMP R3 System during Match Week. A "managed" Scramble would be implemented no earlier than the 2011 Match, according to NRMP Executive Director Mona M. Signer. " (http://www.nrmp.org/ on 9/13/09)

Playing the admissions game

A recent NBER paper focuses on how student behavior has changed in reaction to the increasing competition for admission to elite colleges (resulting both from the growing size of the high school graduation cohorts, and the increasing rates of application to and attendance at college). They report that more students are taking AP exams, volunteering, and applying to more colleges.

Playing the Admissions Game: Student Reactions to Increasing College Competition by John Bound, Brad Hershbein, Bridget Terry Long - #15272 (ED LS)

Abstract: Gaining entrance to a four-year college or university, particularly a selective institution, has become increasingly competitive over the last several decades. We document this phenomenon and show how it has varied across different parts of the student ability distribution and across region, with the most pronounced increases in competition being found among higher-ability students and in the Northeast.
Additionally, we explore how the college preparatory behavior of high school seniors has changed in response to the growth in competition.
We also discuss the theoretical implications of increased competition on longer-term measures of learning and achievement and attempt to test them empirically; the evidence and related literature, while limited, suggests little long-term benefit.
http://papers.nber.org/papers/W15272

"Overall, high school students in 2004 engaged in significantly more behavior associated with college preparation, on average, than did their counterparts from 10 and 20 years before. The share taking at least a semester of calculus in high school rose from 9.2 percent to 15.2 percent between 1982 and 2004. In just the 12 years from 1992 to 2004, the fraction of seniors having taken at least one Advanced Placement (AP) exam nearly doubled, from 16.5 to 30.9 percent." (p12) (but reported time spent on homework is down)

"...data from CIRP's Freshman Survey shows that the percentage of college
freshmen who regularly volunteered during their senior year of high school increased rapidly from about 45 percent in 1987 and 1988 up to about 70 percent by 2000, where it has roughly remained since." (p14)

"While 25 percent of students had applied to four or more schools in 1972, more than half had by 2004. Figure 4 shows that the percentage of students applying to seven or more schools rose from about 3 percent in 1972 to 18 percent in 2004. This implies that more than half of the increase among those applying to four or more schools is driven by those applying to seven or more schools; within the last ten years, more than three quarters of the increase
is from those applying to seven or more schools. The increase in application rates has been widespread throughout the selectivity distribution, with students at highly selective institutions not only sending more applications on average, but also increasing the number of applications sent at a faster pace earlier on.
Another proxy for college application behavior is the number of SAT score reports sent to various colleges.16 When taking the SAT, students are allowed to send up to four score reports at no additional marginal cost. However, in recent years, students have been sending far more score reports. As shown in the three panels of Figure 5, the number of scores sent (and the likelihood of sending more than four) rises dramatically with the student's score. For those with scores above 1400 (around the 97th percentile), the median number of reports sent is around eight, which suggests that even students with very high scores do not feel that they can rely on being accepted into a top school." (p19)

Penny wise and pound foolish on kidneys and antirejection drugs

Medicare pays for kidney transplants (which are both better and cheaper than the dialysis it replaces and that Medicare also pays for). But Medicare pays for only three years of anti-rejection drugs, which transplant recipients must take as long as they still have a transplanted kidney. It doesn't make any sense, not even financial sense. Here's a nicely reported story by Kevin Sack from the NY Times: U.S. Cost-Saving Policy Forces New Kidney Transplant

"The story of Ms. Whitaker’s two organ donations — the first from her mother and the second from her boyfriend — sheds light on a Medicare policy that is widely regarded as pound-foolish. Although the government regularly pays $100,000 or more for kidney transplants, it stops paying for anti-rejection drugs after only 36 months."...

"Most of the cost of [her] dialysis and the transplant, totaling hundreds of thousands of dollars, was absorbed by the federal Medicare program, which provides broad coverage for those with end-stage renal disease.
Despite that heavy investment, federal law limits Medicare reimbursement for the immunosuppressant drugs that transplant recipients must take for life, at costs of $1,000 to $3,000 a month."...

"By late 2003, her transplanted kidney had failed, and she returned to dialysis, covered by the government at $9,300 a month, more than three times the cost of the pills. Then 15 months ago, Medicare paid for her second transplant — total charges, $125,000 — and the 36-month clock began ticking again.
“If they had just paid for the pills, I’d still have my kidney,” said Ms. Whitaker, who shares an apartment in the La Jolla neighborhood with her boyfriend, Joseph D. Jamieson. “I’d be healthy, working and paying taxes.” "...

"Bills have been introduced in Congress since 2000 to lift the 36-month limit and extend coverage of immunosuppressant drugs indefinitely. They have never made it to a vote, largely because of the projected upfront cost; the Congressional Budget Office estimates that unlimited coverage would add $100 million a year to the $23 billion Medicare kidney program.
But the cost-benefit analysis would seem obvious. The most recent report from the United States Renal Data System found that Medicare spends an average of $17,000 a year on care for kidney transplant recipients, most of it for anti-rejection drugs. That compares with $71,000 a year for dialysis patients and $106,000 for a transplant (including the first year of monitoring)...."

"A provision to cover the drugs is in the sweeping House health care bill, which has cleared three committees. It is uncertain whether the Senate Finance Committee will include it in its bill.
Since 1973, end-stage renal disease has been the only condition specifically covered by Medicare regardless of age. In 1988, coverage was extended for 12 months to anti-rejection drugs, which had recently been developed. Congress gradually lengthened the cutoff to 36 months, and then in 2000 made the benefit unlimited for those who are at least 65 or disabled. The rationale for leaving out younger transplant recipients was simply that the money was not there, Congressional aides said. "

In other kidney news, I understand through the grapevine that the planned September pilot of a national kidney exchange program to be conducted by UNOS has been put on hold for the time being.

Your penny for my two cents: micropayments on the web

Even if you are prepared to pay a penny for my thoughts, the transaction costs would likely deter you, unless the payment can be made automatically. This is the problem facing micropayments in particular, and it makes it hard for newspapers to charge for news.

Harvard's Neiman Journalism Lab reports on Google's marketplace proposal, which would allow customers to maintain a Google account that could be billed without requiring the customer to maintain accounts or reveal information to each content provider: Google developing a micropayment platform and pitching newspapers: “‘Open’ need not mean free”