Venture capital looks at the design of marketplaces

Not long ago I had a chance to listen to some interesting presentations at a conference sponsored by Greylock Partners, about businesses that aim to make marketplaces: As Marketplaces Evolve, Greylock Places Its Bets

 Leena Rao writes:
"The idea of marketplaces as a business model for technology startups isn’t new. We saw some marketplaces go belly up in the bubble, and saw a few, like eBay, grow into massive businesses. However, the marketplace model has experienced a renaissance of sorts lately, with companies like Airbnb, Uber and others gaining serious traction and becoming billion-dollar-plus businesses.

Greylock Partners held a conference in mid-November devoted to talking about design, product development, the economics and more around marketplaces, spearheaded in part by the firm’s newest partner and former eBay Motors creator, Simon Rothman.

As part of its new $100 million commitment to investing in marketplaces, Greylock assembled Reid Hoffman, Airbnb co-founder and CEO Brian Chesky, eBay CEOJohn Donahoe, Nobel Prize Laureate and marketplace expert Alvin Roth, and many others to discuss the rise of marketplaces and much more. I was able to sit down with some of the speakers to talk about their thoughts on why marketplaces are hot right now.

Hoffman, who founded LinkedIn and was an early investor in Facebook, sees many parallels between networks and marketplaces. On the similarities in both models, he says: “There’s a question of how do you identify people? What reputational systems underlie it? What kinds of information and signaling? What kind of transactions go public? There’s some differences, too, but it’s essentially a similar brain activity.”

As for why marketplaces are getting more attention now, Hoffman believes that it’s in part due to mobile and the progression in human behavior. “Now everyone is comfortable with the notion of, ‘Oh, I could actually find someone I don’t know and transact with them, either as travelers, hosts, sellers, buyer.’ Those that can actually work mean that I have some trust in these mechanisms,” he explains further.

Rothman agrees with Hoffman, and told me that trust is a huge element of why marketplaces have evolved, as well as the biggest challenge for these marketplaces. “They’re really selling trust. And until the web adds social identity, I think creating trust at scale is really hard. As we’ve heard, marketplace is about influence, and if you can’t control the experience, if you can’t control the product, you can’t control the fulfillment. All you can control is trust and you need to have that. And then mobile is an accelerant to that. If you are a local market, or a local business, you have to have mobile. There’s just no way Uber works without mobile,” he says.

...

So how do marketplaces add trust? Hoffman advises to look at mechanisms by which you can essentially borrow some trust and add it to the product, such as using social networks or identities. He recalled a product development from his PayPal days, where an engineer developed a better way to authenticate bank accounts.

For years, in order to authenticate a bank account you had to send in a voided check, and a copy of your drivers license. PayPal realized that if they wanted to get to scale, the company would have to make it easier to create accounts. “If we can’t solve this problem, we basically don’t have an interesting business model,” he said. One of the early engineers developed a way to send two sub-dollar transactions to the account, to create a PIN of sorts for instant verification.

While friction is something most marketplaces want to remove, Rothman argues that some should consider “the concept of strategic friction” when it comes to trust and safety. He thinks it’s one of the only places where friction is not only tolerable but kind of desirable.

...

"Hoffman says that Airbnb was creating liquidity out of space. Even if the hosts didn’t own their real estate, the liquidity involved is “hugely valuable and motivating to them.” So, they’ll adopt mobile products, and go through hoops to make that happen. “There was no question that this is going to work,” he says. 

...

Now that Greylock is allocating some of its new $1 billion in funding toward the marketplace model, we’ll be looking to see where the firm will be placing its bets. Rothman thinks that in the next five years there will be more $1 billion dollar marketplaces than there were in the past 20 years, and we already have quite a few that are rising fast. Stay tuned."

Webcast of the luncheon talks on market design from the 2014 AEA Annual Meeting

The AEA has posted a collection of webcasts from the 2014 annual meeting in Philadelphia, including from the
Nobel Laureate Luncheon
William Nordhaus; Paul Milgrom; Roger Myerson 
View Webcast

The video is a little less than an hour: and consists of brief introductions by Nordhaus, and talks on market design and its history by Milgrom and Myerson, and a short talk by me with some thoughts on the future of market design as economic engineering and the science that supports it.  (spoiler: I think it will be important to study congestion...)
**************

Eleven 2014 Annual Meeting sessions are available online. (I enjoyed Claudia Goldin's magisterial address on gender and jobs, which reminded me of the work following up on this and the matching aspects of pursuing both careers and marriages, of our joint student Stephanie Hurder.):

•    AEA Presidential Address "A Grand Gender Convergence: Its Last Chapter" (Claudia Goldin)
•    AEA Awards Ceremony (William Nordhaus)
•    Richard T. Ely Lecture "Retirement Security in an Aging Population" (James Poterba)
•    Nobel Laureate Luncheon (Paul Milgrom, Roger Myerson, and Alvin Roth)
•    AEA/AFA Joint Luncheon (Jeremy Stein)
•    Chairman Bernanke Presentation (Ben Bernanke, Kenneth Rogoff, and Anil Kashyap)
•    What's Natural? Key Macroeconomic Parameters after the Great Recession
•    Discounting for the Long Run
•    Financial Globalization
•    Climate Change Policy after Kyoto
•    Macroeconomics of Austerity

Scalper resistant Super Bowl tickets

Assaf Romm points me to the story: Take that, Super Bowl scalpers! Ticket-lottery winners to get non-transferable tickets

"Every year, the NFL holds a lottery for football fans for the next year’s Championship. Some 30,000 people entered this year, McCarthy said. The number of winners will double to 1,000, McCarthy said, and the price of the ticket will drop to $500, from last year’s $600.

But there’s a catch. Winners won’t get their tickets until game day, and they won’t be able to leave the stadium after receiving them, McCarthy said.

“The point is we want these people going to the game,” McCarthy said. “So you can’t turn around and sell them to a scalper.”

Ricky Vohra's class in market design at Penn

Ricky Vohra is teaching market design at Penn, and describes it on his blog: Graduate Market Design Class (2nd Try)

Here's the reading list

Topics & Papers

1. IPOs

Jaganathan and Sherman: Why do IPO Auctions Fail

Ritter: Equilibrium in the IPO market

Background Reading (to be read by all)
Ljungqvist: IPO Underpricing: A Survey
Ritter and Welch: A review of IPO activity, pricing and allocations

2. Health Care & Insurance Markets

Cochran, J: Time Consistent Health Insurance, JPE 1995.
Cochran, J. : After the ACA: Freeing the market for health care
Fang & Gazzara: Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence
Handel, Hendel and Whinston: Equilibria in Health Exchanges: Adverse Selection vs. Reclassification Risk
Levine, Kremer and Albright: Making Markets for Vaccines
Kremer: Creating Markets for New Vaccines Part 1: rationale
Kremer: Creating Markets for New Vaccines Part 2: design issues 

Background Reading (to be read by all)
Rothschild, M. & J. Stiglitz: Equilibrium in Competitive Insurance Markets, QJE 1976.
Fang, H: Insurance Markets in China

3. Market for Cybersecurity Insurance

Kesan, Majuca & Yurcik: Cyberinsurance as a market based solution to the problem of cybersecurity

4. Affirmative Action

Hickman: Effort, Race Gaps and Affirmative Action: A Game Theoretic Analsyis of College Admissions
Chung: Affirmative Action as an Implementation Problem
Fryer and Loury: Valuing Identity: The simple economics of Affirmative action policies

Background Reading (to be read by all)
Fang and Moro: Theories of Statistical Discrimination and Affirmative Action: a survey

5. Assigning Counsel

Friedman & Schulhofer: Rethinking Indigent Defense: Promoting Effective Representation Through Consumer Sovereignty and Freedom of Choice for All Criminal Defendants

6. The Role of Politics

Acemoglu: Why not a political Coase theorem?
Acemoglu: Modeling Inefficient Institutions

Cash for Kidneys: The Case for a Market for Organs. Becker and Elias in the WSJ

Gary Becker and Julio Elias have a reprise of their 2007 Journal of Economic Perspectives paper in this weekend's Wall Street Journal, in a cogent column called Cash for Kidneys: The Case for a Market for Organs.

Their 2007 JEP paper was called  Introducing Incentives in the Market for Live and Cadaveric Organ Donations (slightly more direct link here).

Between then and now the number of people on the waiting list for kidneys has gone up. Their 2007 article has these sentences: "Almost 17,000 persons were waiting for a kidney transplant in 1990. But this number grew rapidly, so that about 65,000 persons were on this waiting list by the beginning of 2006."

This weekend's WSJ column starts with the sentence "In 2012, 95,000 American men, women and children were on the waiting list for new kidneys, the most commonly transplanted organ."

So, the arguments that they repeat have gotten stronger over time: the shortage of organs is costly in every sense, and could likely be relieved by allowing kidneys to be bought and sold by live donors, and allowing the purchase of organs from deceased potential donors, i.e. by repealing the part of the 1984 National Organ Transplant Act that makes such sales a felony in the United States. (Similar laws exist in most of the developed world: the only country that seems to have an explicitly legal market for kidneys is Iran, although many black and grey markets exist.)

So, why hasn't this argument made any headway, either in the U.S. or overseas? Is patient repetition of the argument the best way to make the case? I don't know the answers, but I think that the repugnance of organ sales is a subject worth studying, not just for science but also for those who might like to influence policy.

In the same issue of the JEP as Becker and Elias (2007) was my article Repugnance as a Constraint on Markets (more direct link here), which sought to understand not just the repugnance to kidney sales, but to many economic transactions, in different places and times, e.g. to charging interest on loans, or having markets for slaves or indentured servants. I noted that kidney exchange doesn't arouse the repugnance that sales do. I've since blogged about a lot of different repugnant transactions including compensation for donors (as of this writing my most recent post on transactions that some regard with repugnance is headlined Womb transplants in Sweden (where surrogacy is illegal)...)

Note that the prohibition on organ sales is not some law that remains on the books merely through inattention. This is illustrated by the recent events surrounding the tug of war over whether it might be legal to compensate (even) bone marrow donors. Briefly, the ninth circuit court of appeals issued a ruling that said that in some circumstances bone marrow donors could be compensated, but then the Department of Health and Human Services proposed regulations that would keep the ban in place.   So the opposition to organ sales--even to compensating bone marrow donors--is alive and well.

But things don't go all in one direction. Bob Slonim reminds me that while we rely on unpaid donation of whole blood in the United States, most of our supply of blood plasma comes from paid donors.

I've participated in some efforts to understand better the repugnance to compensating organ donors, e.g. here's a survey with Steve Leider about who disapproves of kidney sales, and some correlates of such disapproval:
Leider, Stephen and Alvin E. Roth, ''Kidneys for sale: Who disapproves, and why? American Journal of Transplantation  10 (May), 2010, 1221-1227.

More recently, Muriel Niederle and I conducted a different sort of survey, which assessed the relative willingness of Americans to contemplate monetary rewards for the heroism associated with kidney donation:
"Niederle, Muriel and Alvin E. Roth, “Philanthropically Funded Heroism Awards for Kidney Donors?” forthcoming in Law & Contemporary Problems, 77:3, 2014.

Judd Kessler and I have a paper forthcoming in the American Economic Review papers and proceedings (May 2014) called "Getting More Organs for Transplantation," in which we summarize the issue this way:

"Kidney sales are often the leading example of a repugnant transaction cited by those who would put stricter limits on markets in general (e.g. Sandel 2012, 2013), because of their sense that such sales arouse widespread opposition. A representative sample survey of Americans conducted by Leider and Roth (2010) suggests that disapproval of kidney sales correlates with other socially conservative attitudes, but that it does not rise to the level of disapproval of other repugnant transactions such as prostitution. In addition, there is evidence that the manner of the payment to an organ donor may mitigate some of the repugnance concerns. Niederle and Roth (forthcoming 2014) find that payments to non-directed kidney donors are deemed more acceptable when they arise as a reward for heroism and public service than when they are viewed as a payment for kidneys."

That paper closes with this thought on the presently available options: 
"While these potential donors could save thousands of additional lives, at current rates of medical need, these donors alone would not be able to supply all the demand. Consequently, we must continue working on numerous fronts to solve this growing problem. "

In summary, the issue of whether and how organ donors might be compensated is an important policy issue that also touches on an important and still poorly understood social science phenomenon. Repetition of the basic arguments may move the discussion forward as the background facts become more severe, and it's great to see the issue addressed in such a public forum as the WSJ. But it may also be that repetition of arguments is not enough. To make progress in the face of opposition, it seems likely to be useful to understand better the nature of the opposition.

School choice in Newark

Innovative Enrollment Initiative Gives Students Real Choice

"If we're serious about reforming public education in our nation, we have to ensure all our kids have access to high-quality schools. Newark, New Jersey, is launching an innovative new universal enrollment program this week aimed at achieving that goal as well as promoting equity and transparency, but federal regulations may stand in the way of full implementation. The federal government needs to loosen the reins and let cities and school districts do what's best for their students.

"Newark's universal enrollment program, part of the district superintendent's One Newark initiative, is representative of a promising trend emerging in a handful of school districts across the United States. Under universal enrollment, parents will simply fill out a single application to rank their top public district or charter school choices. This streamlined process will ease the burden for parents who will no longer need to go door to door to find out the options, timelines and enrollment requirements of their local schools.

"The program, which went live Jan. 6, is a groundbreaking collaboration between the Newark public school district and the city's robust charter school sector. As of now, more than three quarters -- 16 of the city's 21 public charter schools -- are on board to participate. "

Barcelona experimental economics summer school

Experiments and macroeconomics at Barcelona, this just in:

Announcing the 2014 Barcelona LeeX Experimental Economics Summer School in Macroeconomics

Macroeconomic theories have traditionally been tested using non-experimental "field" data. However, modern, micro-founded macroeconomic models can also be tested in the laboratory, and researchers have begun to pursue such experimental testing and evaluation. This June, graduate students specializing in macroeconomics or experimental economics, as well as junior faculty members and researchers of macroeconomic are invited to attend the Barcelona LeeX summer school devoted to experimental macroeconomics research. This intensive 5 day summer school will be held from June 11 to 17, 2014 at Universitat Pompeu Fabra (UPF) in Barcelona, Spain.  Students will be taught experimental methods and exposed to a number of macroeconomic applications that have been tested experimentally. Students will be asked to participate in experiments and to develop their own experimental macroeconomic projects. Faculty will assist with and critique these projects.

Details about the summer school including how to apply are provided on the summer school website

http://www.upf.edu/leex/events/bleess_2014/index.html

This year we invite summer school students to present their ongoing research during the summer school. Such presentations may take the form of presentations during the summer school or a poster session during the associated conference workshop, depending on the number of students seeking to present their work. Such presentations will be at the discretion of the summer school organizers.

Students can submit research proposals as part of their summer school application, though this is not a requirement for participation in the summer school.  Indeed, one purpose of the summer school is to think of macroeconomic topics and models that can be implemented in the laboratory in a way that advances our knowledge of behavior.

Summer school students are also invited to attend the 2 day 5th LeeX International Workshop co-organized with Barcelona GSE Summer Forum on Theoretical and Experimental Macroeconomics  from June 9-10, 2014 that will also take place at UPF immediately prior to the summer school.

The deadline for summer school applications is Monday, April 21 2014.  

Summer school in experimental macroeconomics faculty:

• Guest lectures
• Charles Noussair (Tilburg University)
• Cars Hommes (University of Amsterdam)
• Shyam Sunder (Yale University)
• John Duffy (University of Pittsburgh)
• Frank Heinemann (Technische Universität Berlin)
• Rosemarie Nagel (ICREA, Universitat Pompeu Fabra, and  Barcelona GSE )

Summer school organizers:

• John Duffy (University of Pittsburgh)
• Frank Heinemann (Technische Universität Berlin)
• Rosemarie Nagel (Universitat Pompeu Fabra)

Please forward this message to any interested parties.

Organ donor registration in Israel

Judd Kessler and I just got this email from Jacob Lavee (about whom I've written before), with good news that he kindly gave me permission to post:

Dear Al and Judd,

Just a short note to let you know that the Israeli Minister of Health has adopted this week my recommendation to establish by law the modified mandated choice model based upon your work, whereby the issuing or renewal of an ID, passport or driving license will be conditional upon answering the question of becoming a registered donor to which only a positive answer will be given as an option or else the “Continue” button will be selected. It seems that, contrary to my previous worries, the entire registration for these documents is currently being done online and therefore there should be no technical issues to implement this model.

Thank you guys for providing the proof of concept which I cited to the ministerial committee.

This model will be added upon the prioritization model, which is already implemented by law.

Jay
*******************

The work Jay is referring to is a paper, currently out for review at a journal that doesn't like prepublication on the web, "Don’t Take ‘No’ For An Answer: An experiment with actual organ donor registrations," which finds, in a study of the online MA state organ donor registry, that requiring potential donors to choose either "yes" or "no" when asked if they wish to be on the donor registry does not increase registrations, and seems likely to reduce the rate of donations by next of kin when the deceased is unregistered.

Womb transplants in Sweden (where surrogacy is illegal)

The NY Times has the story: Swedish Doctors Transplant Wombs Into 9 Women

 "STOCKHOLM — Nine women in Sweden have successfully received transplanted wombs donated from relatives in an experimental procedure that has raised some ethical concerns. The women will soon try to become pregnant with their new wombs, the doctor in charge of the pioneering project has revealed.

"The women were born without a uterus or had it removed because of cervical cancer. Most are in their 30s and are part of the first major experiment to test whether it's possible to transplant wombs into women so they can give birth to their own children.

"In many European countries, including Sweden, using a surrogate to carry a pregnancy isn't allowed.
...
"Some experts have raised concerns about whether it's ethical to use live donors for an experimental procedure that doesn't save lives. But John Harris, a bioethics expert at the University of Manchester, didn't see a problem with that as long as donors are fully informed. He said donating kidneys isn't necessarily life-saving, yet is widely promoted.

"Dialysis is available, but we have come to accept and to even encourage people to take risks to donate a kidney," he said.

"Brannstrom said the nine womb recipients are doing well. Many already had their periods six weeks after the transplants, an early sign that the wombs are healthy and functioning.
...
"None of the women who donated or received wombs has been identified. The transplants began in September 2012 and the donors include mothers and other relatives of the recipients.
...
"The transplant operations did not connect the women's uteruses to their fallopian tubes, so they are unable to get pregnant naturally. But all who received a womb have their own ovaries and can make eggs. Before the operation, they had some removed to create embryos through in-vitro fertilization. The embryos were then frozen and doctors plan to transfer them into the new wombs, allowing the women to carry their own biological children.
...
""If this had been possible when I was younger, no doubt I would have been interested," she said. Gimre, who has two foster children, said the only option for women like her to have biological children is via surrogacy, which is illegal in many European countries, including Norway and Sweden.
...
"The technique used in Sweden, using live donors, is somewhat controversial. In Britain, doctors are also planning to perform uterus transplants, but will only use wombs from dying or dead people. That was also the case in Turkey. Last year, Turkish doctors announced their patient got pregnant but the pregnancy failed after two months.

"Mats has done something amazing and we understand completely why he has taken this route, but we are wary of that approach," said Dr. Richard Smith, head of the U.K. charity Womb Transplant UK, which is trying to raise 500,000 pounds ($823,000) to carry out five operations in Britain.

"He said removing a womb for donation is like a radical hysterectomy but it requires taking a bigger chunk of the surrounding blood vessels to ensure adequate blood flow, raising the risk of complications for the donor. Smith said British officials don't consider it ethical to let donors take such chances for an operation that isn't considered life-saving.
...
"Doctors in Saudi Arabia performed the first womb transplant in 2000, using a live donor, but it had to be removed after three months because of a blood clot."

The Federal Law Clerk Hiring Plan is officially over

Here is the official announcement, dated January 13, 2014:

To: All United States Judges
From: Judge John D. Bates
RE: LAW CLERK HIRING (INFORMATION)

In accordance with recommendations made by the Online System for Clerkship
Application and Review (OSCAR) Working Group (Working Group), I am writing to inform
you that the Federal Law Clerk Hiring Plan has effectively been discontinued and no further
dates are being set in connection with that plan.
I also have adopted the Working Group’s recommendation that there be a phased
approach for opening OSCAR to law school students in 2014. The Administrative Office
will open OSCAR to rising second-year law school students in a read-only capacity effective
June 1, 2014, and permit them to build and finalize clerkship applications effective August 1,
2014. Third-year law school students and alumni will continue to have full access to OSCAR
year-round.
The Working Group judges have developed a list of Federal Law Clerk Hiring Best
Practices to support transparency in the hiring process. In addition, the Working Group is
asking the National Association for Law Placement to create a list for judges of
recommendations regarding clerkship recruiting best practices from the law school
perspective. The Administrative Office will post the list in OSCAR. I hope you will find
both lists helpful in determining your clerkship recruitment and hiring practices.
The Judiciary supports a transparent clerkship recruitment and hiring process, and
OSCAR plays a valuable role in ensuring transparency. OSCAR’s online application process
eliminates paper and saves court staff time. Using OSCAR adds diversity to judges’
applicant pools and enables judges to electronically manage a large volume of applications
through search and sort features. I encourage you to use OSCAR to post your hiring
practices. To register for an OSCAR account, please visit the OSCAR registration page.


HT: Catherine Rampell

An economist's advice on online dating by Stanford's Paul Oyer

In a WSJ column and in a new book, Paul Oyer offers his perspective on economics and online dating, based on his personal experience. In the column he gives an economist's advice on dating, and in the book he illustrates principles of economics using online dating as his main example.

Here's the column: How Nobel-Winning Economic Theories Can Help Your Online Dating

And here's the book: Everything I Ever Needed to Know about Economics I Learned from Online Dating 
by Paul Oyer

Women protest Saudi driving ban, in small numbers

The WSJ has the story: Women Accelerate Challenge to Saudi Driving Ban

"Three Saudi women drove cars on Saturday in an ongoing challenge of the world's last official ban on women driving, activists and female drivers in the kingdom said.

Security forces in the Red Sea port city of Jeddah pulled over one female driver there within minutes of her taking the wheel, a passenger in the woman's car said. In the eastern city of Khobar, another woman drove at length Saturday without being stopped. A third drove Saturday evening in the capital, Riyadh, and also wasn't detained, activists said.

Saudi Arabia is the only country in the world where women are officially forbidden from driving."

**************
It must be difficult to get a lot of Saudi women drivers to protest the driving ban, since there can't be a lot of Saudi women drivers. Most if not all of the women protesters at this and similar demonstrations must have learned to drive outside of Saudi Arabia, i.e. in places where it is legal for them to drive.  Perhaps women who want to protest the driving ban should find another way...e.g. many more women would be able to participate in a protest that involved blocking traffic by lying down in the road, which would resemble protests that have attracted attention to causes in other countries.

Kidney exchange at University of Alabama at Birmingham

UAB Launches Paired Exchange and Incompatible Kidney Transplant Program

Dale Mortensen, 1939-2014

Dale Mortensen, Nobelist for Labor Market Work, Dies at 74

Here's the short bio from his website:

Dale T. Mortensen 

is the Board of Trustees Professor of Economics at Northwestern University, a visiting Professor of Economics at Aarhus University, a research associate of the National Bureau of Economic Research (NBER), and a research fellow of the Institute for the Study of Labor (IZA). Professor Mortensen received his B.A. in Economics from Willamette University in 1961 and his Ph.D. in Economics from Carnegie-Mellon University in 1967. Mortensen is a fellow of Econometrica Society, the American Academy of Arts and Sciences, the Society of Labor Economics, and the European Economic Association.  He was awarded the IZA Labor Economics Prize in 2005 and the Society of Labor Economics Mincer Prize in 2007. In 2008 he was elected an American Economic Association Distinguished Fellow. Together with Peter Diamond and Christopher Pissarides he was awarded the 2010Sveriges Riksbank (Nobel) Prize in Economic Sciences in Memory of Alfred Nobel, 2010 for their contributions to the analysis of “markets with search friction.” In 2013 he was elected as a member of the National Academy of Science and the Royal Danish Academy of Sciences and Letters.

 

Mortensen pioneered the theory of search and search unemployment and extended it to study labor turnover, personal relationships, and labor reallocation. His insight, that friction is equivalent to the random arrival of trading partners, has become the leading technique for analysis of labor markets and the effects of labor market policy. The development of equilibrium dynamic models designed to account for wage dispersion, the time series behaviour of job and worker flows, and the role of reallocation in the determination of aggregate growth and productivity are the principal topics of his current research. His publications include over fifty scientific articles. His books include Wage Dispersion: Why Are Similar Workers Paid Differently?, published by MIT Press in 2003, and Job Matching, Wage Dispersion, and Unemployment (jointly authored with Christopher A. Pissarides),published by Oxford University Press in 2011.

Learning and adaptation in the social sciences: NAS Sackler conference, January 10-11

Ido Erev and I will be presenting a paper  on learning and choice behavior at one of the Sackler Colloquia run by the National Academy of Sciences:

In the Light of Evolution VIII: Darwinian Thinking in the Social Sciences

Organized by Brian Skyrms, John C. Avise and Francisco J. Ayala

January 10-11, 2014 at the Arnold and Mabel Beckman Center in Irvine, CA.

 Overview

Darwinian thinking is now having a major impact in social science, both in the consideration of the consequences of biological and cultural evolution on traditional questions, and in the use of quasi-Darwinian adaptive dynamics in evolutionary game theory. This Darwinian point of view is having a major impact on economics, political science, sociology, anthropology, and demography.

Agenda

I.  Evolution of Social Norms

Bargaining and Fairness, Kenneth Binmore, University College London
Cooperation, Natalia Komarova, University of California, Irvine
Friendship and Natural Selection, James H. Fowler, University of California, San Diego
Reputation and Punishment, Michihiro Kandori, University of Tokyo

II. Social Dynamics

The Replicator Equation and Other Game Dynamics, Ross Cressman, Wilfrid Laurier University
Payoff-Based Learning Dynamics, Alvin Roth, Harvard University
Strategic Learning Dynamics, David K. Levine, Washington University
Cultural Evolution, Marcus W. Feldman, Stanford University

Keynote Address:  Public Goods: Competition, Cooperation, and Spite, Simon A. Levin, Princeton University

III. Special Sciences

Evolutionary Demography, Kenneth W. Wachter, University of California, Berkeley
Folklore of the Elite and Biological Evolution, Barry O’Neill, University of California, Los Angeles
Economics, Ted Bergstrom, University of California, Santa Barbara
Psychology, Dale Purves, Duke-National University of Singapore Graduate Medical School

IV. Applications

Evolutionary Implementation in Mechanism Design, Éva Tardos, Cornell University
Some Dynamics of Signaling, Brian Skyrms, University of California, Irvine
The Rate of Innovation Diffusion in Social Networks, H. Peyton Young, Oxford University
Homophily, Culture, and Coordinating Behaviors, Matthew O. Jackson, Stanford University

Black markets and black market prices

A website call Havocscope (subtitle: Global Black Market Information) compiles information from news stories and other public sources about black markets and reported transaction prices around the world, from counterfeit goods of various sorts (from pharma to tech to food), to repugnant markets from narcotics to contract killing.

Here's their take on prices in the black markets for kidneys for transplantation.

When you click on the prices they indicate, you find their source, often a newspaper story that may only contain an anecdotal report of a transaction, so I don't think they make strong claims for the accuracy of their data, but it makes for interesting reading.

Video of market design talk at USF

Not long ago I gave a talk at the University of San Francisco. My host was Professor Ludwig Chincarini, and he has posted this video of my lecture:

Celebrating experimental economics (and being celebrated for it) at the University of Amsterdam, January 8

The University of Amsterdam (UvA) is the home of one of Europe's important centers of experimental economics at Creed:

On January 8 I'll be helping celebrate CREED when I receive an honorary doctorate at UvA, along with the legal scholar James Crawford. The announcement says this about me, and my professional connection to the focus of CREED's work:
"He is also one of the pioneers of experimental economics, regarded as one of the Big Four (along with Charles Plott, Reinhard Selten and Vernon Smith) responsible for putting this field on the map in the latter half of the 20th century.
Prof. Arthur Schram, professor of Experimental Economics, has been designated honorary supervisor."

I'll also get a chance to talk to students: Room for Discussion ontvangt Nobelprijswinnaar Alvin Roth, or maybe with more English here
*************
update: here's the video, see at 1:11:41)

D47. Market Design is now officially a field of study

I returned last night from Philadelphia where the American Economic Association’s annual meeting was held. While I was there, my Pittsburgh colleague Asatoshi Maeshiro informed me that Market Design has arrived. In particular, the AEA publishes the Journal of Economic Literature, which classifies articles according to what field they are in. And the newest JEL Classification Codes include market design, under the overall heading of Market Structure and Pricing.  We’re D47.

•        D4          Market Structure and Pricing

•        D40        General

•        D41        Perfect Competition

•        D42        Monopoly

•        D43        Oligopoly and Other Forms of Market Imperfection

•        D44        Auctions

•        D45        Rationing; Licensing

•        D46        Value Theory

•        D47 Market Design

•        D49        Other

When you click on microeconomics, followed by market structure, followed by market design on the JEL classification webpage, you get to this description of the new field, with example (which are clickable on the web page, but don't seem to be when I copy them...:

D470 Market Design

Guideline: Covers studies concerning the design and evolution of economic institutions, the design of mechanisms for economic transactions (such as price determination and dispute resolution), and the interplay between a market�s size and complexity and the information available to agents in such an environment.

Keywords: Markets, Microeconomic Engineering, Price Formation, Quasi-markets

Caveats: Purely theoretical studies concerning mechanism design should be classified in D82. Purely empirical studies concerning market structure should be classified in the appropriate category under L1.

Examples:

• Investment Incentives and Electricity Market Design: The British Experience
• The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics
• Unraveling Reduces Mobility in a Labor Market: Gastroenterology with and without a Centralized Match

Market design today in Philadelphia

Two sessions I'll be attending at today's AEA meetings...


Jan 05, 2014 8:00 am, Pennsylvania Convention Center, 204-C 
American Economic Association

Frontiers of Market Design (D4)

Presiding: ALVIN ROTH (Stanford University)

The High-Frequency Trading Arms Race: Frequent Batch Auctions as a Market Design Response

ERIC BUDISH (University of Chicago)

PETER CRAMTON (University of Maryland)

JOHN SHIM (University of Chicago)

[View Abstract]

Organ Donation Loopholes Undermine Warm Glow Giving: An Experiment Motivated By Priority Loopholes in Israel

ALVIN E. ROTH (Stanford University)

JUDD KESSLER (University of Pennsylvania)

[View Abstract]

Mechanism Design in Large Games: Incentives and Privacy

MICHAEL KEARNS (University of Pennsylvania)

MALLESH PAI (University of Pennsylvania)

AARON ROTH (University of Pennsylvania)

JONATHAN ULLMAN (Harvard University)

[View Abstract]

Strategy-Proofness, Investment Efficiency, and Marginal Returns: An Equivalence

JOHN WILLIAM HATFIELD (Stanford University)

FUHITO KOJIMA (Stanford University)

SCOTT DUKE KOMINERS (University of Chicago)

[View Abstract]

Discussants:

MICHAEL OSTROVSKY (Stanford University)

JAMES ANDREONI (University of California-San Diego)

ILYA SEGAL (Stanford University)

LARRY SAMUELSON (Yale University)

Jan 05, 2014 10:15 am, Pennsylvania Convention Center, 204-A 
American Economic Association

Market Design for Auction Markets (D7)

Presiding: PAUL MILGROM (Stanford University)

The VCG Auction in Theory and in Practice

HAL VARIAN (Google)

CHRIS HARRIS (Google)

[View Abstract]

Market Design and the Evolution of the Combinatorial Clock Auction

LAWRENCE AUSUBEL (University of Maryland)

OLEG BARANOV (University of Colorado)

[View Abstract]

The Continuous Combinatorial Ascending Price Auction

CHARLES R. PLOTT (California Institute of Technology)

[View Abstract]

Deferred Acceptance Heuristic Auctions and United States Spectrum Repurposing

PAUL MILGROM (Stanford University)

ILYA SEGAL (Stanford University)

[View Abstract]

Discussants:

ALVIN E. ROTH (Stanford University)

TAYFUN SONMEZ (Boston College)