Book publishers, and book citations

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

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

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

Complementarities in markets and computers

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

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

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

Real estate; disaggregating a bundle of services

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

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

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

Skydeck360: Signaling in the MBA Job Market

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

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

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

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

Matching with contracts

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

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

Market prediction and the Challenger disaster

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

Prediction markets and Olympic cities

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

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

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

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

Incentives and food safety

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

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

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

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

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

Kidney sales

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

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

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

Course allocation by Budish, updated

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

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

Hotbeds of innovation: food in Portland

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

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

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

Klemperer's auction design for toxic assets

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

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

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

Michael Kearns heads up a new market design program at Penn

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

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

Further unraveling of basketball recruiting

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

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

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

Interesting excerpts:

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

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

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

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

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

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

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

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


My thoughts on unraveling in college basketball:

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

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

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

Further consequences of unraveling of law firm hiring

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

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

A proliferation of penny auctions

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

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

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

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

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

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

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

HT Eduardo Azevedo and Muriel Niederle

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

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

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

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

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

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

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

Reserving spaces in crowded places

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

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

HT: Anouar El Haji at U. Amsterdam

Are names destiny?

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

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

Thaler on mandated choice

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

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

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

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

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

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