Pennsylvania Adoption Exchange

Here's a new paper on matching for adoption:

The Pennsylvania Adoption Exchange Improves Its Matching Process
Vincent W. Slaugh, Mustafa Akan, Onur Kesten
Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA 15213
vslaugh@cmu.edu, akan@cmu.edu, okesten@andrew.cmu.edu
M. Utku Unver 
Department of Economics, Boston College, Chestnut Hill, MA, 02467 unver@bc.edu

Abstract: We utilize operations research and market design frameworks to improve the e ectiveness of a recommender system for children in state custody and prospective adoptive families, and describe the implementation of changes to the Pennsylvania Adoption Exchange (PAE). The purpose of PAE is to nd permanent families for hard-to-place children in state custody, and it provides match recommendations to over 200 children each year. After describing PAE's operation, we use data provided by PAE to analyze the relationship between child attributes and adoption outcomes. With the primary objective of improving adoption outcomes, our recommendations cover the information that PAE collects to make recommendations, the decision rules that produce child-family match suggestions, and the interactions between PAE and system participants. We demonstrate the value of improved information about families and children using a discrete-event simulation of PAE. As a result of our collaboration, PAE has begun to collect new information from families and children to better predict match success, to use a spreadsheet tool that provides a more nuanced comparison of family preferences and child attributes, and to change the match recommendation process to reduce strategic manipulation by families. A survey of child case workers in Pennsylvania and interviews with PAE managers guided these changes. Insights from this project are relevant to other adoption exchanges, as well as the placement of children in foster care.
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A related paper, which I blogged about earlier, is here:
Child-Adoption Matching: Preferences for Gender and Race, 2013, by  Mariagiovanna Baccara, Allan Collard-Wexler, and Leonardo Felli, and Leeat Yariv, American Economic Journal: Applied Economics, forthcoming. 

Nobel to Fama, Hansen, and Shiller

Hearty congratulations to Gene Fama, Lars Peter Hansen, and Robert Shiller, who won the Economics Nobel today for Trendspotting in Asset Markets (for changing our understanding of asset prices)  I predict that they will have an exciting and busy year.

Others will write more expertly than I about their work on asset prices, and about finance and behavioral finance. And journalists will be glad to have economics laureates who do something that journalists and the public think that economists do (in contrast to last year's laureates who did something further from the popular conception of economics).

Let me just add a handclap or two by pointing out that Shiller is also a market designer: I've always admired his 1993 Clarendon lectures, Macro Markets: Creating Institutions for Managing Society's Largest Economic Risks. (Here's my brief 2009 post on that...)

Nobel labs: panoramic photos

One of the funnier post-Nobel phenomena, aside from the attention of journalists, is the attention of artists.  The most interesting of those whom I have interacted with is photographer Volker Steger, who in collaboration with the Landau organization has created a series of photo/interviews consisting of panoramic portraits of the places where Laureates work, together with links to embedded interviews, some just audio, and some video: NOBEL LABS 360° An Interactive Multimedia Project.

You can see the interviews/photos taken so far here: NOBEL LABS 360°, and here are the interviews with me at Stanford. including some in our actual lab, and with my colleague Muriel Niederle.

I haven't fully figured out how to navigate the site, but you can let the panorama rotate slowly, or you can navigate to parts of it by experimenting with your mouse...if you click on the link called "Introducing Alvin Roth" you can see a video of me working at and walking on (and talking about) my treadmill desk...and if you explore more you can find a nice shot that includes Rodin's Burghers of Callais on the Stanford campus.

Tomorrow I will graduate from being the most recent Economics laureate to a more emeritus status, and I'm looking forward to a few fewer distractions, although some of them have been quite fun.

EU debate: who gets the maternity leave in a surrogate birth?

The WSJ has the story: Surrogate Births Stir Divisions in EU--Long Contentious, The Practice is Now Splitting Europe's top court

"EU laws entitle women in the 28-country bloc to at least 14 weeks of paid maternity leave, although many states offer longer leave than that.

"The laws on surrogacy, by contrast, are much less harmonized. Eight EU member states, among them Germany, France, Italy and Spain, prohibit women from carrying another woman's child altogether. Those nations say they fear the practice could lead to the exploitation of women in financial difficulty or create emotional problems for surrogate mothers who give up the child they carried to birth.

"Other European states prohibit payments that go beyond compensation for medical expenses or restrict the use of fertility treatments or egg donation in surrogacy arrangements.

"In the U.S., laws on surrogacy also vary from state to state, with some placing limits on how much money surrogate mothers can be paid. Since there's no federal right to paid maternity leave, it's generally up to employers to design their own policies. The federal Family Medical Leave Act allows workers—men and women—to take up to 12 weeks of unpaid leave to take care of a relative, provided the company they work for has at least 50 employees.

"Despite the limitations, surrogacy is becoming increasingly popular in Europe. Many childless couples look to other countries, such as Ukraine, India or the U.S.— to find surrogate mothers."

Horses and slaughterhouses

Controversy about whether there should be horse slaughterhouses in the United States has made the news because of controversy between American Indian groups whose treaty lands are overrun by feral horses, and horse protection organizations that include actors who have played American Indian roles in films: On Fate of Wild Horses, Stars and Indians Spar

"Free-roaming horses cost the Navajos $200,000 a year in damage to property and range, said Ben Shelly, the Navajo president. There is a gap between reality and romance when, he said, “outsiders” like Mr. Redford — who counts gunslinger, sheriff’s deputy and horse whisperer among his movie roles — interpret the struggles of American Indians.
...
"The horses, tens of thousands of them, are at the center of a passionate, politicized dispute playing out in court, in Congress and even within tribes across the West about whether federal authorities should sanction their slaughtering to thin the herds. The practice has never been banned, but stopped when money for inspections was cut from the federal budget.

"In Navajo territory, parched by years of unrelenting drought and beset by poverty, one feral horse consumes 5 gallons of water and 18 pounds of forage a day — sometimes the water and food a family had bought for itself and its cattle.

"According to the latest estimates, there are 75,000 feral and wild horses in the nation, and the numbers are growing, Mr. Shelly said. They have no owners, and many of them are believed to be native to the West. The tribes say they must find an efficient way of reducing the population. Although it is common to shoot old and frail horses — and more merciful than a ride to the slaughterhouse — there are too many of them to be dealt with, and there is some money in rounding them up and selling them at auction.
...
"The United States has never fostered a market for horse meat, a dietary staple in places like Belgium, China and Kazakhstan. It does have a history of horse slaughtering, though; at one point, there were more than 10 such slaughterhouses in the country. The last three, one in Illinois and two in Texas, closed in 2007, after Congress banned the use of federal money for salaries for personnel whose job was to inspect the horses and the facilities where they would be slaughtered. (One thing inspectors look for is evidence of drug use on the horses, not uncommon among those once used for racing.)

"In their last year, the three plants slaughtered a total of 30,000 horses for human consumption and shipped an additional 78,000 for slaughter in Canada and Mexico, according to statistics by United States and Canadian authorities. Congress’s subsequent unwillingness to finance inspections made slaughtered horse meat ineligible for the seal of inspection it needs to be commercially sold, effectively ending the practice.

"Wayne Pacelle, the president of the Humane Society of the United States, a lead plaintiff in the lawsuit and one of the groups lobbying Congress to end horse slaughter, said its efforts were focused on preventing the killing of horses for human consumption “to avoid creating an industry that would turn horses into a global food commodity.”

Online anonymity, bitcoin, illegal drug markets, and traditional law enforcement

If you were a Silk Road customer, you'll have to find another online drug market: F.B.I. Seizes Silk Road, an Online Drug Market, and Makes Arrest. But it sounds like while the organizer was arrested (after soliciting a murder for hire) the anonymity of transactions may have allowed many of the customers to escape detection.

"The Silk Road marketplace is available through Tor, a popular tool for maintaining anonymity online. Bitcoin, a virtual currency, is used for transactions. The identities of sellers are not known to the buyers. About $1.2 million in sales were conducted a month in early 2012, according to a study by an assistant professor at Carnegie Mellon University, Nicolas Christin.

"As part of the investigation into Silk Road, authorities said, they seized 26,000 bitcoins worth $3.6 million.

"The arrest is part of the latest push by federal authorities to police the anonymous marketplaces that have flourished as a result of virtual currencies and software meant to help users browse the Web anonymously. In recent months, federal authorities charged seven people believed to be linked to Liberty Reserve, another virtual currency, which prosecutors described as a $6 billion money-laundering operation that facilitated a black market for everything from stolen identities to child pornography.

"One recent study found that a broad range of drugs, including ecstasy, LSD and heroin, were available on Silk Road, but that marijuana was the most popular item offered for sale. Books and erotica are also sold.

The Algorithm of Happiness...

Elliott Peranson sends me the following note:

The NRMP has redone their web site at www.nrmp.org. Check out their new tagline on the home page. Sounds more appealing than the "Roth-Peranson Algorithm". 

Saving babies with no questions asked

Sign at a Cambridge, MA fire station, September 2013

Recent NBER papers bearing on market design

Here are three:

The Effects of Mandatory Transparency in Financial Market Design: Evidence from the Corporate Bond Market

Paul Asquith, Thom Covert, Parag Pathak

NBER Working Paper No. 19417
Issued in September 2013
NBER Program(s):   AP   CF 

Many financial markets have recently become subject to new regulations requiring transparency. This paper studies how mandatory transparency affects trading in the corporate bond market. In July 2002, TRACE began requiring the public dissemination of post-trade price and volume information for corporate bonds. Dissemination took place in Phases, with actively traded, investment grade bonds becoming transparent before thinly traded, high-yield bonds. Using new data and a differences-in-differences research design, we find that transparency causes a significant decrease in price dispersion for all bonds and a significant decrease in trading activity for some categories of bonds. The largest decrease in daily price standard deviation, 24.7%, and the largest decrease in trading activity, 41.3%, occurs for bonds in the final Phase, which consisted primarily of high-yield bonds. These results indicate that mandated transparency may help some investors and dealers through a decline in price dispersion, while harming others through a reduction in trading activity.

The Impact of the Internet on Advertising Markets for News Media

Susan Athey, Emilio Calvano, Joshua Gans

NBER Working Paper No. 19419
Issued in September 2013
NBER Program(s):   IO   PR 

In this paper, we explore the hypothesis that an important force behind the collapse in advertising revenue experienced by newspapers over the past decade is the greater consumer switching facilitated by online consumption of news. We introduce a model of the market for advertising on news media outlets whereby news outlets are modeled as competing two-sided platforms bringing together heterogeneous, partially multi-homing consumers with advertisers with heterogeneous valuations for reaching consumers. A key feature of our model is that the multi-homing behavior of the advertisers is determined endogenously. The presence of switching consumers means that, in the absence of perfect technologies for tracking the ads seen by consumers, advertisers purchase wasted impressions: they reach the same consumer too many times. This has subtle effects on the equilibrium outcomes in the advertising market. One consequence is that multi-homing on the part of advertisers is heterogeneous: high-value advertisers multi-home, while low- value advertisers single-home. We characterize the impact of greater consumer switching on outlet profits as well as the impact of technologies that track consumers both within and across outlets on those profits. Somewhat surprisingly, superior tracking technologies may not always increase outlet profits, even when they increase efficiency. In extensions to the baseline model, we show that when outlets that show few or ineffective ads (e.g. blogs) attract readers from traditional outlets, the losses are at least partially offset by an increase in ad prices. Introducing a paywall does not just diminish readership, but it furthermore reduce advertising prices (and leads to increases in advertising prices on competing outlets).

Privacy and Data-Based Research

Ori Heffetz, Katrina Ligett

NBER Working Paper No. 19433
Issued in September 2013
NBER Program(s):   AG   LS   PE 

What can we, as users of microdata, formally guarantee to the individuals (or firms) in our dataset, regarding their privacy? We retell a few stories, well-known in data-privacy circles, of failed anonymization attempts in publicly released datasets. We then provide a mostly informal introduction to several ideas from the literature on differential privacy, an active literature in computer science that studies formal approaches to preserving the privacy of individuals in statistical databases. We apply some of its insights to situations routinely faced by applied economists, emphasizing big-data contexts.

Matching couples, in the QJE

Our paper on couples has appeared online at the QJE: MATCHING WITH COUPLES: STABILITY AND INCENTIVES IN LARGE MARKETS

Here are the links on Parag Pathak's page, including the links to the original working paper which has some material absent from the published version.

Kojima, Fuhito, Parag A. Pathak, and Alvin E. Roth, 
Matching with Couples: Stability and Incentives in Large Markets 
(Appendix, Computer Programs, older version NBER 16028 with statement and proof of Thm 2)

Quarterly Journal of Economics, 2013, 128(4)


I blogged about it earlier here.

Here's the abstract:

Accommodating couples has been a long-standing issue in the design of centralized labor market clearinghouses for doctors and psychologists, because couples view pairs of jobs as complements. A stable matching may not exist when couples are present. This article’s main result is that a stable matching exists when there are relatively few couples and preference lists are sufficiently
short relative to market size. We also discuss incentives in markets with couples. We relate these theoretical results to the job market for psychologists, in which stable matchings exist for all years of the data, despite the presence of couples. 

Jeff Ely thinks deeply about dating mechanisms, and beliefs

The convention in 'speed dating' is that everyone is asked who they would like to meet again, and only if you and someone else both indicate each other are you given one another's contact information so that you can arrange a date.  This has a lot of good features, but it does mean that if you indicate you would like to go on a date with someone and you don't get their contact info, you learn that they didn't want to go on a date with you (which you might have preferred not to know).

Here's Jeff over at Cheap Talk, thinking about alternative mechanisms before settling on the familiar one:

First you are asked whether you would like to hook up with your friend. Then you are asked whether you believe your friend would like to hook up with you. These are just setup questions. Now come the important ones. Assuming your friend would like to hook up with you, would you like to know that? Assuming your friend is not interested, would you like to know that? And would you like your friend to know that you know?

Assuming your friend is interested, would you like your friend to know whether you are interested? Assuming your friend is not interested, same question. And the higher-order question as well.

These questions are eliciting your preferences over you and your friend’s beliefs about (beliefs about…) you and your friend’s preferences. This is one context where the value of information is not just instrumental (i.e. it helps you make better decisions) but truly intrinsic. For example I would guess that for most people, if they are interested and they know that the other is not that they would strictly prefer that the other not know that they are interested. Because that would be embarrassing.

And I bet that if you are not interested and you know that the other is interested you would not like the other to know that you know that she is interested. Because that would be awkward.

Notice in fact that there is often a strict preference for less information. And that’s what makes the design of a matching mechanism complicated.  Because in order to find matches (i.e. discover and reveal mutual interest) you must commit to reveal the good news. In other words, if you and your friend both inform the experimenters that you are interested and that you want the other to know that, then in order to capitalize on the opportunity the information must be revealed.

But any mechanism which reveals the good news unavoidably reveals some bad news precisely when the good news is not forthcoming. If you are interested and you want to know when she is interested and you expect that whenever she is indeed interested you will get your wish, then when you don’t get your wish you find out that she is not interested.

Fortunately though there is a way to minimize the embarrassment. The following simple mechanism does pretty well. Both friends tell the mediator whether they are interested.  If, and only if, both are interested the mediator informs both that there is a mutual interest. Now when you get the bad news you know that she has learned nothing about your interest. So you are not embarrassed.

However it doesn’t completely get rid of the awkwardness. When she is not interested she knows that *if* you are interested you have learned that she is not interested. Now she doesn’t know that this state of affairs has occurred for sure. She thinks it has occurred if and only if you are interested so she thinks it has occurred with some moderate probability. So it is moderately awkward. And indeed you know that she is not interested and therefore feels moderately awkward.

The theoretical questions are these:  under what specification of preferences over higher-order beliefs over preferences is the above mechanism optimal? Is there some natural specification of those preferences in which some other mechanism does better?

Update: Ran Spiegler points me to this related paper.

The Handbook of Market Design

The Handbook of Market Design, from Oxford University Press, is out (it's been printed), and should be available by the time you read this.

Here's the Table of Contents:

You could place your order here:)

Course allocation at U. Toronto

U of T students trade cash for seats in full classes

University of Toronto students are buying and selling spots in fully-booked courses, turning registration into a bidding war.

“$100 to whomever drops (History of Modern Espionage),” posted Christopher Grossi on Facebook Tuesday. “I really need this course.”

The third-year history student said the 180-person course filled up before his designated registration time. After talking to the professor without success, he said offering money was his last chance to coax someone to trade with him.

The university’s course registration system prioritizes students based on need and creates a wait list for full classes, said Glenn Loney, assistant dean and faculty registrar of the university’s Faculty of Arts and Science.

But there is a narrow window of opportunity in the days after the wait list closes and before the final deadline for students to add or drop courses.

“Once the university drops the wait list, it’s mostly just every man for themselves,” Grossi said.

Some students have taken to Facebook to name a price for their coveted seat. In a post earlier this week, one student offered to sell her spots in two psychology courses for $50 apiece — or she’ll swap for a space in another psychology class.

Third-year computer science student “Lee,” who would not give his full name for fear of repercussions by the university, said he has sold his spot in courses twice, for $20 each. After arranging the deal through the university’s internal email system, Lee met the buyer in the library. On the university’s registration website, Lee dropped the course and the buyer applied for it immediately afterward, snagging Lee’s newly vacated spot.

Loney said students have been swapping spots in courses for years and there are no rules against it.

“There’s nothing that would put it in the same league as cheating, or an academic advantage,” he said, adding there is a limit to the number of courses a student can enrol in to prevent someone from stocking up on courses with the intent to sell.

Where arrangements were once made through friends, social media has created a much larger marketplace to connect desperate buyers with enterprising sellers.

“Most students find it reprehensible, and don’t participate in it at all,” Loney said. “There’s usually a torrent of abuse heaped on the people who are trying to sell.”

New Orleans School Choice in the WSJ

 School choice in New Orleans is the subject of this WSJ story, which focuses on the search for good school places, and how choice helps...

Inside the Nation's Biggest Experiment in School Choice

"Denver, Chicago and Cleveland have embraced school choice on a smaller scale, but none give as much freedom—to parents and campuses—as New Orleans does: About 84% of its 42,000 public school students attend charters, the largest share of any district in the U.S."

Unravelling in the Business School job market

The WSJ has a video report

Here's the caption: 

Top B-School Talent Plucked Before Class Starts

Schools try to restrict when companies can start coming to campus. But that doesn’t limit what companies try to do off-campus, and it’s not uncommon for students to show up at orientation with internship offers for next summer in hand.

HT: Jon Levin

MOOCS: massive online certifiers

There's an increasing move among companies that offer MOOCs, Massive Online Courses, to also offer certification.  This may be where the money is.

e.g. this from the WSJ: Job Market Embraces Massive Online Courses--Seeking Better-Trained Workers, AT&T, Google and Other Firms Help Design and Even Fund Web-Based College Classes

""The common denominator [among the new MOOC certification programs] is that there really is an interest in finding credentials that don't require a student to buy the entire degree," said Sebastian Thrun, the Stanford University computer-science professor who co-founded Udacity, a MOOC with 1.6 million enrolled students in 200 countries. "This is really democratizing education at its best."

Organ donation registration on college applications, in India

Here's the story: Governor tells V-Cs to offer option for organ donation in college admission forms

"In a meeting held recently, the governor had urged the V-Cs to offer a separate column in the college admission forms for organ donation. T C Benjamin, Additional Chief Secretary (public health) said filling the column is not mandatory and students will have the choice. The state had made it a must for hospitals to inform the organ transplant centres about brain-dead patients. "

Further unraveling of (combined) college and medical school admissions

Shenendehowa to offer early medical school acceptance

"CLIFTON PARK — A new program that may be the first of its kind in the nation will allow one medicine-minded Shenendehowa High School student to get accepted to college and medical school early — a few months before the junior prom.

"More than a year before classmates know where they’re going after graduation, one student who undergoes a rigorous application process will be accepted into Siena College’s and Albany Medical College’s combined eight-year physician program. On Thursday, officials from the school district and both colleges announced the program — “ShenNext Medicine: Selecting Tomorrow’s Doctors Today.”

"They believe the program is the first in the country to admit a student as a junior, though many institutions have partnerships that accept high school seniors to undergraduate colleges and medical schools at the same time. Siena and Albany Medical College have had such a partnership for 27 years, and Albany Med has similar programs with Union College and Rensselaer Polytechnic Institute.

"Juniors in the Shen program still have to complete their senior year and maintain good grades."

HT: Mary O'Keeffe

Study mechanism design online with Jason Hartline

Jason Hartline writes:

Please share the following announcement:

   *** Online Self-study on Mechanism Design and Approximation  ***

   Web: http://www.eecs.northwestern.edu/hartline/courses/mdna.html

   Discussion: https://piazza.com/northwestern/fall2013/eecs499/home

   To enroll: go to course page on Piazza and enroll as a student.

Synopsis. This course is a self-study course based on the manuscript "Mechanism Design and Approximation" which is based on a graduate course that has been developed at Northwestern over the past five years. Over the fall quarter we will work through roughly one chapter per week. The week will start with students reading and discussing the material of the chapter and it will conclude with students working together to solve and write up solutions to the chapter exercises.  The textbook is in final draft and your comments and suggestions will help improve the book for future students.

Excerpt from Chapter 1: Our world is an interconnected collection of economic and computational systems. Within such a system, individuals optimize their actions to achieve their own, perhaps selfish, goals; and the system combines these actions with its basic laws to produce an outcome. Some of these systems perform well, e.g., the national residency matching program which assigns medical students to residency programs in hospitals, e.g., auctions for online advertising on Internet search engines; and some of these systems perform poorly, e.g., financial markets during the 2008 meltdown, e.g., gridlocked transportation networks. The success and failure of these systems depends on the basic laws governing the system. Financial regulation can prevent disastrous market meltdowns, congestion protocols can prevent gridlock in transportation networks, and market and auction design can lead to mechanisms for allocating and exchanging goods or services that yield higher profits or increased value to society.

This text focuses on a combined computational and economic theory for the study and design of mechanisms. A central theme will be the tradeoff between optimality and other desirable properties such as simplicity, robustness, computational tractability, and practicality. This tradeoff will be quantified by a theory of approximation which measures the loss of performance of a simple, robust, and practical approximation mechanism in comparison to the complicated and delicate optimal mechanism. The theory provided does not necessarily suggest mechanisms that should be deployed in practice, instead, it pinpoints salient features of good mechanisms that should be a starting point for the practitioner.

Market Design conference(s) in June at Stanford

Scott Page sends the following email announcement:

Dear All,

I have exciting news about the 2014 NSF/CEME Decentralization Conference.

- It will take place on June 8-9, 2014 in Palo Alto, California.

- Fuhito Kojimo of Stanford University will be the local organizer.

- The conference will be collocated with two other major mechanism design conferences: the NBER Market Design Conference and the ACM Conference on Economics and Computation.  The conferences will run sequentially with overlapping plenary sessions, with the Decentralization Conference running for the first two days, followed by the Market Design Conference and then ACM.

- Participants are encouraged to attend all three conferences and to bring graduates students.

-  We will be sending out an official call for papers in about a month.

I think this will be an incredible opportunity to bring together three communities that look at similar questions and use similar tools.  I recognize that the June date is later than our typical March or April meeting, and apologize for any inconvenience this might cause.  

Here is the “official” announcement from Susan Athey, David Parkes and myself.  Please feel free to forward this email to anyone who might be interested.

         ACM, Market Design and Decentralization Conference

                                    June 8 -12, 2014

  Palo Alto, CA

The ACM Conference on Economics and Computation (EC'14), the NBER Market Design Conference, and the NSF/CEME Decentralization Conference will collocate this June at Stanford University.  The jointly run conferences will include both joint and independent sessions to facilitate greater interactions across the three research communities.  The joint sessions will include invited keynote presentations by leaders in the fields of incentives, market design, computation, and decentralization. Proposals for presentations in the independent sessions should be submitted following the procedures of each individual conference.  Individuals who normally participate in one of the conferences are strongly encouraged to also attend the other conferences so as to build a more interdisciplinary community of scholars interested in common topics.