Ariel Pakes gives the Arrow Lecture in Jerusalem

If you're in Jerusalem tomorrow, you have a chance to hear Ariel Pakes' Arrow Lecture:

17:00-18:00 Ariel Pakes, Arrow lecture:

Learning and Equilibrium in A New Market

It is part of

The 29th Jerusalem Summer School of Economics

Industrial Organization

Event date: June 26 - July 5, 2018 

Organizers:

Eric Maskin, General Director (Harvard University)
Ariel Pakes, Codirector (Harvard University)
Elchanan Ben-Porath,Codirector (The Hebrew University)





Industrial Organization studies how markets are structured and the way they respond to changes in conditions (e.g., to policy revisions). The field draws heavily on both theory and empirical work, and both will be amply represented in the Summer School. We will focus on several topics of current research interest: vertical markets, allocation in markets without prices, market dynamics, and regulation.


  
List of speakers:


NAME AFFILIATION EMAIL TOPICS Nikhil Agarwal Massachusetts Institute of Technology agarwaln@mit.edu The analysis of centralized market allocation mechanisms John Asker The University of California johnaskecr@econ.ucla.edu The analysis of regulation Alon Eizenberg  The Hebrew University of Jerusalem       aloneiz@mscc.huji.ac.il The analysis of regulation Myrto Kalouptsidi Harvard University  myrto@fas.harvard.edu The analysis of market dynamics Robin Lee Harvard University robinlee@fas.harvard.edu The   analysis of   vertical markets Eric Maskin          Harvard University emaskin@fas.harvard.edu  The analysis of market dynamics Ariel Pakes Harvard University apakes@fas.harvard.edu The analysis of market dynamics Parag Pathak Massachusetts Institute of Technology ppathak@mit.edu The analysis of centralized market allocation mechanisms Mike Whinston Massachusetts Institute of Technology whinston@mit.edu The analysis of vertical markets Ali Yurukoglu Stanford University ayurukog@stanford.edu The analysis of regulation

Here's a link to the full program.

There will be several sessions on matching markets:

Wednesday, July 4

9:30-11:00 Parag Pathak: Introduction to Matching Theory

11:00-11:30 Coffee Break

11:30-13:00 Nikhil Agarwal: Revealed Preference for Matching Markets

Thursday, July 5

9:30-11:00 Parag Pathak: Market Design Meets Research Design

11:00-11:30 Coffee break

11:30-13:00 Nikhil Agarwal: The Organization of Organ Markets

Frontiers of Knowledge Awards 2018, video of the presentation ceremony

Presentation ceremony of the 10th edition of the Frontiers of Knowledge Awards

18/06/2018

Bill Nordhaus at the BBVA Award ceremony

Rob Porter, Ariel Pakes, and Tim Bresnahan

 The celebration and speech of Bill Nordhaus runs from minutes 32:15-40:00 in the above video








The celebration of Tim Bresnahan, Ariel Pakes and Rob Porter, and the speech by Pakes on the behalf of all of them, run from 46:05-51:20 in the above video.








**************
See my earlier post,

Tuesday, February 20, 2018

Tim Bresnahan, Ariel Pakes and Rob Porter win BBVA Award, for their pioneering work in industrial organization, and Bill Nordhaus wins for his work in climate change

Marketplaces, Markets, and Market Design (my Presidential address in the July AER)

Here is the paper that grew out of my Presidential address as I stepped down from the AEA presidency in January. It attempts to summarize my current views on market design.

Marketplaces, Markets, and Market Design

• Alvin E. Roth



AMERICAN ECONOMIC REVIEW
VOL. 108, NO. 7, JULY 2018
• (pp. 1609-58)

Download Full Text PDF 
(Complimentary)

• Article Information

Abstract

Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.

Citation

Roth, Alvin E. 2018. "Marketplaces, Markets, and Market Design." American Economic Review, 108 (7): 1609-58.DOI: 10.1257/aer.108.7.1609

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Here's the video of my delivery of a preliminary version of this longish paper as a (relatively) short (1 hour*) talk at the AEA meetings in January, 2018:
AEA Presidential Address - Marketplaces, Markets and Market Design
Alvin E. Roth, introduced by Olivier Blanchard
View Webcast
***************

*the video has adjustable speed. If you listen to it at 1x, you hear it as I presented it.  If you listen to it at .5x, you hear me as my students probably do, droning slowly on. If you listen to it at 1.6 or 2x, you might not be able to hear individual words, but you can enjoy the body language...

Kidney conference: Paris School of Economics, June 28

Kidney Allocation : Evaluation and Perspectives" June 28, 2018 Campus Jourdan - Paris school of economics - Paris

Localisation | Location Campus Jourdan - Paris school of economics - 48 boulevard Jourdan 75014 Paris Floor 1 - Room R1-13

Organisateurs | Organizers Julien Combe (UCL, London), Victor Hiller (LEMMA, U Panthéon-Assas) and, Olivier Tercieux (Paris School of Economics). Program: 09:00 - 10:00 Peter Biro (Hungarian Academy of Sciences) “Kidney Exchange Practices in Europe” 10:00 – 10.30 Coffee Break 10:30 - 11:30 Marie-Alice Macher (Agence de Bio-Médecine) “Kidney transplantation with living donor versus deceased donor in France From the subsidiarity desired by the pioneers to complementarity” 11:30 – 12:30 Victor Hiller (LEMMA, Université Panthéon-Assas) “Perspectives on the Kidney Exchange Program in France” joint with Audry, Combe, He, Jacquelinet, Macher, Tercieux 12:30 – 14:00 Lunch 14:00 - 15:00 Maximilien Burq (MIT) “Effect of Match-run Frequencies on the Number of Transplants and Waiting Times in Kidney Exchange” joint with Ashlagi, Bingaman, Manshadi, Gamarnik, Murphey, Roth, Melcher, Rees 15:00 - 16:00 Daniel Waldinger (MIT) “An Empirical Framework for Sequential Assignment: The Allocation of Deceased Donor Kidneys” joint with Agarwal, Ashlagi, Rees and Somaini 16-00 – 16:30 Coffee Break 16:30 - 17:30 Yinghua He (Rice) “Kidney Exchange in the Shadow of Desensitization” joint with Combe, Hiller and Tercieux

Alibaba forms Luohan Academy to promote research in digital economy

I just returned from a lightning visit to Hanzhou, the home of Alibaba, which is founding a research academy to study the digital economy.  It will be very interesting to see what develops.

Here are some news stories, with pictures:

Alibaba Initiates the Open Research Platform "Luohan Academy"

"HANGZHOU, China, June 27, 2018 /PRNewswire/ -- Alibaba Group Holding Limited ("Alibaba Group") (NYSE: BABA) has advocated the establishment of the "Luohan Academy" ("Academy"), an open research platform with Nobel Laureates and leading international social scientists to address universal challenges faced by societies arising from the rapid development of digital technologies."
*************

阿里巴巴倡议成立罗汉堂 马云：希望罗汉堂为全世界服务
(G translate: Alibaba proposes to establish Luohantang.Ma Yun: I hope Luohantang will serve the world."

Jack Ma,Tom Sargent, Al Roth, Chris Pissarides.June 26, 2018 Hangzhou

***********
update: here's the first photo, annotated (from http://hznews.hangzhou.com.cn/chengshi/content/2018-06/27/content_7026385.htm)

Skimishing over C-Band radio spectrum

Harnessing Satellite Spectrum for Broadband: Will Incumbents Sell, Stay, or Share?

"At its July meeting, the Federal Communications Commission (FCC) is likely to adopt an unprecedented proposal to open a large band of satellite spectrum for mobile and fixed wireless broadband.  The mid-band spectrum from 3700 to 4200 MHz has become the most sought-after resource for both future “5G” mobile networks and for extending high-capacity “fixed wireless” broadband in rural and other low-density areas where trenching fiber would cost too much or take too long.
...
"The two primary proposals under consideration involve clearing the satellite service off the lower portion of the band (boosting mobile capacity for 5G) and authorizing shared use of the unused frequencies in the remainder of the band (enabling high-capacity fixed wireless). Some stakeholders support both proposals as complementary (a “win-win”); other stakeholders oppose one or both proposals."

And this:

 Google, Intelsat spar over C-Band

"Sparks were flying almost as soon as the first keynote got underway during New America’s Open Technology Institute (OTI) event Friday that examined how things might unfold for the C-Band—the 3700-4200 MHz band that is being eyed for 5G.

"In one corner: The Google-backed effort to allow sharing in the C-Band while protecting incumbents. In another corner, a satellite industry proposal to free up 100 MHz for 5G within 18 to 36 months.

"But those were just two sides represented by the keynote speakers: Andrew Clegg, spectrum engineering lead at Google; and Hazem Moakkit, vice president for spectrum strategy at Intelsat. There are many other sides as well, including video content producers, broadcast stations, cable networks, mobile carriers and rural broadband ISPs, to name a few.
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Repugnance towards carbon emissions trading

Here's a report of an experiment motivated by a desire to understand the repugnance felt in some quarters towards emissions trading as a way to reduce greenhouse gas emissions and other pollutants.

Clean up your own mess: An experimental study of moral responsibility and efficiency
Michael Jakob, DorotheaKübler, Jan ChristophSteckel, and Roelvan Veldhuizen
Journal of Public Economics, 155, November 2017,  138-146

It begins with a gripping account of some of this repugnance (which it uses to motivate an experiment of a more abstract sort):

"emissions trading schemes, have repeatedly faced criticism from various sides. In economics, such criticism has pointed out that emissions trading schemes are likely to face real-world constraints (e.g. related to monitoring requirements and the definition of baselines on how emissions would evolve in the absence of the scheme) that may lower their environmental effectiveness (Wara, 2007; Schneider and Kollmuss, 2015) and economic efficiency (Michaelowa and Jotzo, 2005; Krey, 2005). More fundamental criticisms have been raised by philosophers, climate scientists, environmental activists, and the Church (see for example Caney, 2010 and Page, 2011 for discussions of such criticisms). These types of criticisms often rely on a moral critique equating the trading of emission permits with the medieval practice of paying money to be cleared from one's sins, as put succinctly in the Earth Island Journal (Smith, 2009):

‘Congress's new cap-and-trade scam would put the Church's indulgence scheme to shame.’

In his book ‘Storms of my Grandchildren’, the prominent climate scientist Hansen (2010) expresses a similar concern:

‘A successful new policy cannot include any offsets.[i.e., emissions trading] […] The public must be firm and unwavering in demanding “no offsets”, because this sort of monkey business is exactly the type of thing that politicians love and will try to keep. Offsets are like the indulgences that were sold by the church in the Middle Ages’.

A related argument sees carbon offsets that are used to compensate for greenhouse gas emissions as a way to ease one's conscience without changing behavior. As George Monbiot (2006) writes in “The Guardian”:

‘Our guilty consciences appeased, we continue to fill up our SUVs and fly round the world without the least concern about our impact on the planet … it's like pushing the food around on your plate to create the impression that you have eaten it’.

The Catholic Church has also taken a critical stance on emissions trading, most notably in Francis's (2015) widely discussed encyclical ‘Laudato Si’:

‘The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors’. (Para. 171)

These statements capture the two types of criticisms of emissions trading established by Page (2011). First, emissions trading may fail to bring about long-term behavioral change required for successful climate change mitigation and undermine intrinsic incentives for environmentally friendly behavior. Second, it may violate non-consequential objectives of justice and fairness (see also Caney, 2010).

Hence, there appears to be a strong presumption that monetarily compensating for an environmental externality is not morally equivalent to changing one's behavior to avoid the externality, even if both courses of action result in identical outcomes. This raises the question of why people object to such compensation-based mechanisms. In this study, we hypothesize that people may have a preference to ‘clean up their own mess,’ that is, prefer to personally eliminate environmental externalities they are responsible for."

Visiting Hangzhou

I'm on my way to Hangzhou, via Shanghai, for a meeting called by Alibaba.  I'll only be there for two busy days.
Read all about it:

问大家！和诺奖获得者面对面聊人类未来你来不来?

Here are some others who are coming

1.Patrick Bolton （帕特里克·博尔顿）：哥伦比亚大学教授，美国艺术与科学院院士、英国科学院院士、美国金融学会院士，当代最著名的金融学家之一。

2、Markus Brunnermeier（马科斯·布鲁纳米尔）：普林斯顿大学Bendheim金融中心主任，美国国家经济研究中心和经济政策研究中心成员，撰写有大量关于金融危机和货币政策的著作。

3、Bengt Holmstrom （本特·霍姆斯特罗姆）：麻省理工学院教授，美国人文与科学院院士，契约理论的奠基人之一，2016年获得诺贝尔经济学奖。

4、Josh Lerner （杰斯·勒那）：哈佛商学院教授，100位对私募行业最有影响力的学者之一，研究主要集中在风险投资机构的结构和作用。

5、Preston McAfee （普斯顿·麦法宜）：前谷歌战略技术主管、微软首席经济学家，重视根据微观经济学基础，提出商业战略和竞争解决办法。

6、Christopher A. Pissarides（克里斯托弗·皮萨里德斯）：伦敦经济学院教授，英国社会科学院院士，2010年因在市场搜寻理论和宏观经济方面的突出贡献获得诺贝尔经济学奖。

7、Yingyi Qian（钱颖一）：清华大学经济与管理研究院院长，制度经济学的代表人物，2012年当选为世界计量经济学会会士、2018年当选为清华大学首批文科资深教授。

8、Alvin E. Roth（阿尔文·罗思）：哈佛商学院教授，美国文理科学院院士，美国经济学会主席，在博弈论、市场设计与实验经济学取得卓越贡献，2012年获得诺贝尔经济学奖。

9、Thomas Sargent（托马斯·萨金特）：纽约大学教授，理性预期学派的领袖人物，擅长总体经济学、货币经济学、时间序列等领域，2011年获诺贝尔经济学奖。

10、Michael Spence （迈克尔·斯宾塞）：美国社会科学院院士，提出的信息不对称理论为广泛的市场理论奠定了基础，形成了现代信息经济学的核心，2001年获得诺贝尔经济学奖。

11、Steve Tadelis （史蒂文·泰迪里斯）：加州大学伯克利分校哈斯商学院教授，研究致力于理解企业和市场的契约机制如何影响价值创造，著有《博弈论导论》等。

12、Neng Wang（王能）：美国哥伦比亚大学商学院教授、上海财经大学金融学院院长，研究领域包括公司金融学，宏观经济学，资产定价理论，私募及对冲基金等。

13、Shangjin Wei（魏尚进）：美国哥伦比亚商学院金融学经济学教授，美国国民经济研究局中国经济研究组主任。主要研究领域为国际金融、国际贸易、政府治理和改革、中国经济以及宏观经济学。

14.、Wei Xiong （熊伟）：普林斯顿大学教授，香港中文大学（深圳）经管学院院长，国际顶级期刊《Journal of Finance》联合主编，研究领域包括投机泡沫、金融危机、行为金融学等。

15、Chengang Xu (许成钢)：长江商学院教授、香港大学经济学教授，中国政府治理研究的基石，2013年获孙冶方经济科学奖。

Who accepts which deceased donor kidneys? Agarwal, Ashlagi, Somaini and Waldinger in the AEA P&P

Dynamic Incentives in Wait List Mechanisms

• Nikhil Agarwal
• Itai Ashlagi
• Paulo Somaini
• Daniel Waldinger





AEA PAPERS AND PROCEEDINGS
VOL. 108, MAY 2018
• (pp. 341-47)

Download Full Text PDF 

Abstract

Many scarce public resources are allocated through wait lists that use priorities for individual agents. A new priority system for allocating deceased donor kidneys was adopted in 2014. This redesign was guided by simulations that held decision-rules fixed. We synthesize recent theoretical results to show that the welfare effects of a mechanism depend on the interaction between dynamic incentives and heterogeneity in preferences. We show evidence suggesting that patient decisions on the deceased donor kidney wait list respond to dynamic incentives. Therefore, an empirical approach to dynamic mechanism design is an essential complement to mechanism design theory in dynamic environments.

Tuneups for kidney exchange by Agarwal, Aslahi, Azevedo, Featherstone and Karaduman

From the May 2018, first issue of the AEA (not R) Papers and Proceedings:
What Matters for the Productivity of Kidney Exchange?
Nikhil Agarwal
Itai Ashlagi
Eduardo Azevedo
Clayton Featherstone
Ömer Karaduman

Download Full Text PDF 

Abstract

Kidney exchange platforms serve patients who need a kidney transplant and who have a willing, but incompatible, donor. These platforms match patients and donors to produce transplants. This paper documents operational details of the three largest platforms in the United States. It then uses the framework developed in Agarwal et al. (2017) to examine how practical details influence platform productivity. The results show that reducing frictions in accepting proposed matches, frequent matching, and encouraging altruistic donors are important ways in which a platform can increase its productivity.

Repugnance watch: referendum proposes to end (some) legal prostitution in Nevada

The November ballot will have a referendum on prostitution in two Nevada counties where it is currently legal. The WSJ has the story:

Is the Party Over for Nevada’s Legal Brothels? Possibility of a Ban Looms
Referendum measures, if passed, would outlaw nine bordellos in two Nevada counties as women’s advocates take on working conditions for prostitutes

"A coalition of women’s advocacy groups in Nevada has undertaken referendum initiatives against legal prostitution in Lyon and Nye counties, opposite corners of the state that are home to about half of the state’s brothels.
...
"Nevada began legalizing prostitution on a county basis in 1971, the only state to have done so. Seven of the state’s 16 counties have licensed bordellos; prostitution remains illegal in populous Clark County including Las Vegas, and Washoe County including Reno.

"Women’s activists said they began seeking the bans last year after hearing about prostitutes being assaulted at the brothels. “These are all areas of sexual harassment and assault within the workplace, which is why this is a part of the #MeToo movement,” said Melissa Holland, executive director of Awaken, a Reno women’s nonprofit that teamed with other groups to push for referendums.
...
"Frederick Fabian, manager at the Desert Club brothel in Battle Mountain, Nev., which hasn’t been targeted for a ban, said illegal prostitution is a dangerous profession while legalized prostitution isn’t. “The cathouses and brothels are regulated by the county sheriff and the health facilities,” he said."

Statement on Harmful Consequences of Separating Families at the U.S. Border, by the U.S. National Academies of Sciences, Engineering and Medicine

The National Academies of Sciences, Engineering and Medicine issued the following statement today: 

Statement on Harmful Consequences of Separating Families at the U.S. Border
We urge the U.S. Department of Homeland Security to immediately stop separating migrant children from their families, based on the body of scientific evidence that underscores the potential for lifelong, harmful consequences for these children and based on human rights considerations.

Reports from the National Academies of Sciences, Engineering, and Medicine contain an extensive body of evidence on the factors that affect the welfare of children – evidence that points to the danger of current immigration enforcement actions that separate children from their parents. Research indicates that these family separations jeopardize the short- and long-term health and well-being of the children involved. In addition, the Committee on Human Rights of the National Academies, which has a long history of addressing issues at the intersection of human rights, science, and health, stresses that the practice of separating parents from their children at the border is inconsistent with U.S. obligations under the International Covenant on Civil and Political Rights.

Parents’ impact on their children’s well-being may never be greater than during the earliest years of life, when a child’s brain is developing rapidly and when nearly all of her or his experiences are shaped by parents and the family environment (NASEM, 2016, p. 1).  Young children who are separated from their primary caregivers may potentially suffer mental health disorders and other adverse outcomes over the course of their lives (NASEM, 2016, p. 21-22). Child development involves complex interactions among genetic, biological, psychological, and social processes (NRC and IOM, 2009, p. 74), and a disruption in any of these – such as family disruption – hinders healthy development and increases the risk for future disorders (NRC and IOM, 2009, p.102-104).  Young children are capable of deep and lasting sadness, grief, and disorganization in response to trauma and loss (NRC and IOM, 2000, p. 387).  Indeed, most mental, emotional, and behavioral disorders have their roots in childhood and adolescence (NRC and IOM, 2009, p. 1), and childhood trauma has emerged as a strong risk factor for later suicidal behavior (IOM, 2002, p. 3).  

Decades of research have demonstrated that the parent-child relationship and the family environment are at the foundation of children’s well-being and healthy development. We call upon the Department of Homeland Security to stop family separations immediately based on this evidence.

Marcia McNutt
President, National Academy of Sciences

C. D. Mote, Jr.
President, National Academy of Engineering

Victor J. Dzau
President, National Academy of Medicine

• Parenting Matters: Supporting Parents of Children Ages 0-8 (2016)
• Preventing Mental, Emotional, and Behavioral Disorders Among Young People: Progress and Possibilities(2009)
• Psychosocial Concepts in Humanitarian Work with Children: A Review of the Concepts and Related Literature(2003)
• Reducing Suicide: A National Imperative (2002)
• Early Childhood Development and Learning: New Knowledge for Policy (2001)
• From Neurons to Neighborhoods: The Science of Early Childhood Development (2000)

Canada legalizes recreational marijuana

First, a thoughtful tweet from the Prime Minister, about markets and black markets:

It’s been too easy for our kids to get marijuana - and for criminals to reap the profits. Today, we change that. Our plan to legalize & regulate marijuana just passed the Senate. #PromiseKept

— Justin Trudeau (@JustinTrudeau) June 20, 2018

Here's the story from the CBC:

Senate passes pot bill, paving way for legal cannabis in 8 to 12 weeks
Federal government's bill legalizing recreational cannabis passes 52-29

"Now that the bill has passed, it's up to Prime Minister Justin Trudeau and his cabinet to choose the actual date when the legalization of recreational marijuana becomes law of the land. Bill C-45 comes with a provisional buffer period of eight to 12 weeks to give provinces time to prepare for sales of recreational marijuana."


And here's the NY Times:
Vote in Canada Paves the Way for Legalization of Marijuana

"Canada’s Senate passed legislation on Tuesday that will make Canada the first country with a major economy to legalize recreational marijuana use.

"The bill, which was approved by the House of Commons on Monday, goes next to the governor-general, the representative of Queen Elizabeth, as a formality. Once it is formally approved, the legislation is expected to create a multibillion dollar industry, with Canada joining Uruguay as the only countries to allow their citizens on a national level to use marijuana without fear of arrest."

Best paper award to Mohammad Akbarpour and Shengwu Li for "Credible Mechanisms"

Good news from ec18 now going on at Cornell.

The Best Paper Award goes to "Credible Mechanisms" by Mohammad Akbarpour and Shengwu Li 

Here is the paper: Credible Mechanisms

Abstract: Consider an extensive-form mechanism, run by an auctioneer who communicates sequentially and privately with agents.  Suppose the auctioneer can deviate from the rules provided that no single agent detects the deviation.  A mechanism is credible if it is incentive-compatible for the auctioneer to follow the rules. We study the optimal auctions in which only winners pay, under symmetric independent private values.The  first-price  auction  is  the  unique  credible  static  mechanism.   The  ascending auction is the unique credible strategy-proof mechanism.

And here are their websites
Mohammad Akbarpour
Shengwu Li

Why high incentives might require muscular informed consent (Ambuehl, Ockenfels and Stewart)

Here's a new paper (or at least just recently on the web) showing that subjects who are enticed by high payments might be disproportionately those who have difficulty gathering information about the risks...i.e.. these potential participants respond more to high payoffs than those who might have been able to gather information easily (and might have participated for a lower payment or been deterred even despite a high payment).

Attention and Selection Effects

Sandro Ambuehl (Website), Axel Ockenfels (Website), Colin Stewart

CESifo Working Paper No. 7091 (Mai 2018)

Primary CESifo Category: [13] Behavioural Economics 

Abstract:

Who participates in transactions when information about the consequences must be learned? We show theoretically that decision makers for whom acquiring and processing information is more costly respond more strongly to changes in incentive payments for participating and decide to participate based on worse information. With higher payments, the pool of participants thus consists of a larger proportion of individuals who have a worse understanding of the consequences of their decision. We conduct a behavioral experiment that confirms these predictions, both for experimental variation in the costs of information acquisition and for various measures of information costs, including school grades and cognitive ability. These findings are relevant for any transaction combining a payment for participation with uncertain yet learnable consequences.

Alex Teytelboym on Love Island

Alex T. writes to let me know that he has been explaining British reality TV: a show where beautiful people couple up and couple on camera, apparently.

 The economics of Love Island: how game theory explains 'coupling up'
by  Alex Teytelboym, professor of economics, oxford university 

His concluding paragraphs:

"So how does economic theory help contestants win Love Island? It’s very tempting to dump your partner and couple up with someone else, especially when there are eight weeks to go. But leaving your partner for someone else once tells others you are bad egg who cannot be trusted. As the series nears its end, the rewards from commitment are very high – not just within the Love Island house, but
also with the viewers.

"The public love couples who fight but appear committed. A “folk theorem” in game theory tells us that when people are sufficiently patient they can remain committed even when incentives to cheat are high. Sometimes second best is the best you can get, so you shouldn’t be greedy. Ultimately, while being liked by the public clearly helps, Love Islanders would do well to heed game theorists’
advice."

Title IX reporting incentives and mis-incentives

The Atlantic has a story on a strange Title IX case (and a resulting lawsuit), with the suggestion that it might have to do with perverse legal and procedural incentives:

Mutually Nonconsensual Sex

Here's the critical paragraph:

"The event in précis, as summarized by Robby Soave of Reason magazine:

“Male and female student have a drunken hookup. He wakes up, terrified she's going to file a sexual misconduct complaint, so he goes to the Title IX office and beats her to the punch. She is found guilty and suspended.”

HT: MR

The market for fake phone numbers

I am not of an age at which I get unwelcome requests for my phone number that I can't simply decline, but if you are, Lifehacker has some suggestions of numbers you could give to creepy strangers:

Give Out These Fake Prank Numbers to Creeps

These two make it clear what is likely the demand side of this market.

• (646) 926-6614: The Mary Sue Rejection Hotline, which will say, “Oh hello there. If you’re hearing this message, you’ve made a woman feel unsafe and/or disrespected. Please learn to take no for an answer and respect women’s emotional and physical autonomy.  
• 
  
• (605) 475-6968: The Rejection Hotline, which politely explains to the individual that whoever gave them this number is not into them.

FRONTIERS OF MARKET DESIGN, June 22 at Cornell

Cornell is a hotbed of market design these days: here's the second conference there next week.
FRONTIERS OF MARKET DESIGN

"The first Frontiers of Market Design workshop will be held in Cornell University, Ithaca, NY on June 22, 2018 in conjunction with the 19th ACM Conference on Economics and Computation (EC).

Market design is a field of applied and theoretical research that sits comfortably on the intersection of economics and computer science. In recent decades, the theory and applications of market design have blossomed. In this workshop, we will focus on a set of promising, new applications of market design. In particular, we are interested in applications of market design which involve complex allocation constraints, vast datasets, and dynamic pricing issues. We also want to explore problems which, despite receiving ample theoretical attention, have not been implemented in practice. We welcome theoretical and empirical papers that deal with new domains of market design as well as papers that discuss practical aspects of market design."

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