Kidney exchange needs to be conducted at scale, in Vox

Nikhil Agarwal, Itai Ashlagi, Eduardo Azevedo, Clayton Featherstone,  and Omer Karaduman summarize their recent paper in Vox..eu:

Market failure in kidney exchange
03 November 2018

National kidney exchange platforms significantly boost the number of life-saving kidney transplants by finding complicated exchange arrangements that are not possible within any single hospital. This column examines US data and finds that the majority of kidney exchanges continue to be performed within hospitals, suggesting a fragmented market that comes at a large efficiency cost. National platforms may need to be redesigned to encourage full participation, with reimbursement reform.

Discussion of marijuana in the U.K.--a police chief looks ahead

Now that medical marijuana is legal, can legal recreational use be far behind?  The Guardian has the story.
Former Met police chief urges rethink on cannabis
Bernard Hogan-Howe says there is clear evidence to warrant review of prohibition

"He said: “We already know from the evidence around the world that where people use it for medicinal purposes, it slides into recreational. Surely it’s better that we get ready for that potential change.”

"His intervention follows the legalisation of recreational cannabis in Canada last week, its decriminalisation in Uruguay, Portugal and in several US states, and the relaxation of cannabis laws in the UK to allow the prescription of cannabis-based medicines from next month.
...
"Hogan-Howe joins a growing list of prominent figures who have cast doubt on the coherence of the UK’s approach to enforcing laws that are often ignored with impunity, given that a number of police forces have publicly said they would not prosecute perpetrators of low-level cannabis offences."

The case for compensating Australian plasma donors, by Bob Slonim

Here's Bob Slonim, explaining the current situation in Australia, of unpaid Australian plasma donors, and big imports of plasma products from countries in which donors are paid:

How Australia can fix the market for plasma and save millions

"The National Blood Authority’s 2016-2017 annual report indicates Australian imports of immunoglobulin, a plasma component, provide 44% of domestic demand. This costs A$120 million while the remaining 56% comes from domestic supply costing A$413 million.

"This implies the domestic supply of immunoglobulin costs over three times more per unit than what is imported, despite domestic donors not being compensated."

Waze carpool--launched nationwide

At the NBER market design conference, Michael Schwarz spoke of market design with his practioner hat on (he's Microsoft's chief economist, and former chief scientist at Waze when he worked for Google). He points out the importance of reducing transaction costs, because "enormous [potential] markets may consist of tiny transactions."

Speaking of which, he points out that Waze carpool went live throughout the U.S. last month.

Here's a story: Waze launches carpool service across the U.S.

"Carpooling isn’t just a smart way to cut down on weekly expenditures. It’s also good for the planet: Sharing a car with coworkers, friends, or neighbors keeps 1,600 pounds of greenhouse gas out of the air each year. And if 100 people were to take advantage of a carpool every day, it’d eliminate 1,320 pounds of carbon monoxide and a whopping 2,376,000 pounds of carbon dioxide.

That’s one of the reasons Google-owned navigation platform Waze hopes to lower the barrier to entry. Starting today, it’s launching Waze Carpool, a ridesharing platform it hopes will one day eliminate traffic congestion — and by extension pollution — across the U.S. in all 50 states. The rollout follows successful pilot tests in Israel, California, Texas, Washington, Massachusetts, Illinois, and Nevada."

Some Portuguese press on kidney exchange and market design

When I was in Lisbon I gave two talks, and some interviews.  Here's a nice story written after both my talks:
O que tem a economia a ver com transplantes de rins? Tudo [What Does The Economy Have To Do With Kidney Transplants? Everything.]
by SÓNIA M. LOURENÇO (whose sister once took my experimental economics class at Harvard)

Here's a story that followed the first talk, which was part of an honorary degree ceremony.
A ciência económica ao serviço do amor, saúde e felicidade
by Sandra Maximiano
[G translate: Economic science at the service of love, health and happiness]
Here's a video and some photos of the whole event...

And I gave a tv interview in which the interviewer wished to ignore my pre-interview insistence to talk about game theory and market design and the conference in Portugal as opposed to the recession and recovery, and Italy...(but we reached a sort of compromise...)*

Nobel da Economia em entrevista à TVI critica populismos e alerta para mais migração
Alvin Roth referiu ainda que o fenómeno do aquecimento global vai aumentar a migração.
[G translate: Nobel la Economía in interview with TVI criticizes populism and alert for more migration

Alvin Roth also noted that the phenomenon of global warming will increase migration.]
*************

Private equity job offers to young investment bankers unravel earlier this year, while investment banks try to stem their own unraveling

Two stories from the WSJ about unraveling, at different parts of the financial industry.

1. The WSJ has publishes this year's unraveling story earlier than last year's...

No Experience? No Problem. Private Equity Lures Newbie Bankers With $300,000 Offers.
Annual recruitment drive starts earlier this year as firms try to get a jump on preferred candidates

"An industrywide scramble is under way this week to hire young investment bankers.

"The instigator was Thoma Bravo LLC, which extended its first job offers this past weekend, according to people familiar with the matter. Word spread quickly to rivals, and by Monday interviews were under way at nearly every big firm, including Blackstone Group LP, Apollo Global Management LLC, Carlyle Group LP and TPG.

"Welcome to private equity’s annual recruitment, the frenzied window of interviews and fast-expiring job offers that firms use to fill their junior ranks. The candidates graduated college as recently as last spring and landed at Wall Street investment-banking desks just weeks ago.

"Those lucky enough to get offers will finish their two-year bank analyst programs and start at private-equity firms in the summer of 2020...
...
"Recruiting used to take place during the summer, once applicants had at least a year of experience under their belts. But it has crept earlier as firms try to get a jump on preferred candidates. In 2014, interviews began in February. Last year, recruiting started before Christmas. Applicants describe a frantic period of interviews and “exploding” offers that can expire in 24 hours or less.
**********

2. The investment banks also hire very early in students' college careers, and here's a story about an attempt to resist that urge (good luck with that):

 Goldman, JPMorgan Hit Pause on Intern Recruiting ‘Madness’
A push in recent years to move up application deadlines isn’t bringing in the kinds of candidates the banks need

"Two Wall Street investment banks are easing up in the race to hire their most junior employees.

"Goldman Sachs Group Inc.  and JPMorgan Chase & Co. won’t interview or extend summer internship offers to college sophomores this year and will go back to recruiting students in the fall of their junior year, executives said.

"It is a nod to a softer Wall Street, eager to cast off its sweatbox image to compete with perk-happy Silicon Valley. It is also an acknowledgment that a push in recent years to move up application deadlines isn’t bringing in the kinds of candidates banks need as they try to diversify their overwhelmingly white and male ranks.

“We were contributing to an environment that pressured students to choose rather than to explore,” said Dane Holmes, Goldman’s top human-resources executive. “I want people who want to be at Goldman Sachs, not people who felt they had to say yes to an offer.”

Harvard admissions on trial--dualing economist expert witnesses, interesting details

The Chronicle of Higher Ed has the story:
Dueling Economists: Rival Analyses of Harvard’s Admissions Process Emerge at Trial
There are many strands to this story (and it seems to be ungated), but here I'll just note a few interesting admissions stats.

"Of the 37,000 applicants for admission to the Class of 2019, for instance, 8,200 had perfect grade-point averages, and more than 2,700 had perfect scores on the verbal section of the SAT. But Harvard had only about 1,700 spots to offer. Even if the university wished to consider only grades and test scores, it would be hard-pressed to select a freshman class using those variables alone.
...
"The two economists’ analyses vary in several ways. Perhaps most significant, their respective models include different kinds of applicants. Arcidiacono excludes recruited athletes, the children of alumni, the children of Harvard faculty and staff members, and students on a special list that includes children of donors.

"Card includes them. Though the total number of students who fit those descriptions represents a small fraction of the applicant pool (5 percent), they account for a large proportion of accepted students (29 percent).

EconTrack: The AEA's Job Market Information Board

The AEA has launched a job market information board, which will collect information about the progress of interviews and flyouts for (I imagine) jobs that advertise in the JOE.

Here it is:  EconTrack: The AEA's Job Market Information Board, and the headings for the information they hope to track as the job market develops are these:

Institution, Job Title, Fields, Application Deadline, Interviewing at ASSA?, Interview Invitations Issued, Campus Visits Issued, List of Campus Invitees...

The (hot) job market for "Digitization Economists"

HBS interviews Mike Luca on the market for new economists (and his recent paper with Susan Athey):
Hunting for a Hot Job in High Tech? Try 'Digitization Economist'

"Some 50 tech companies “have been snapping up economists at a remarkable scale,” says Michael Luca, the Lee J. Styslinger III Associate Professor of Business Administration at Harvard Business School. “All of the big Bay Area tech companies have teams of economists, and lots of the smaller companies are starting to hire handfuls of them.” The list includes Google, Microsoft, Airbnb, Uber, Facebook, and numerous smaller companies.

"Tech companies are turning to sharp economic minds to provide their unique lens on business problems like advertising auctions and market design. The accelerating phenomenon has given rise to a new field within economics called the economics of digitization. Research from the field is quickly finding its way into practice, directly through the work of PhD economists, and in the classroom, as HBS and other business schools add more tech-germane courses to their MBA offerings."

Market design and development economics at Harvard

There's a two day conference at Harvard, called
Development Economics and Market Design 

Organizers: Scott Kominers, Natalia Rigol, Ben Roth, Alexander Teytelboym

 Program:
OCTOBER 28, 2018
9:00 to 9:15  Opening Remarks
9:15 to 10:15  Ride Sharing
Abhijit Banerjee MIT
Discussants
Elizabeth Mishkin Harvard University
10:15 to 10:30  Break
10:30 to 11:30  Credit/Targeting
Dilip Mookherjee Boston University
Sujata Visaria Hong Kong University of Science and Technology
11:30 to 11:45  Break
11:45 to 12:45 Fisheries
Jonathan Colmer University of Virginia
Discussants
Daniel Marszalec University of Tokyo
12:45 to 1:45 Lunch
1:45 to 2:45 Localized Markets/Information
Terence Johnson University of Notre Dame
Discussants
Vivek Bhattacharya Northwestern University
2:45 to 3:00 Break
3:00 to 4:00 Mobile Money
Tavneet Suri MIT
Discussants
Ran Shorrer Penn State University
4:00 to 4:15 Break
4:15 to 5:15 Development Medicine
Michael Kremer Harvard University
Christopher Snyder Dartmouth College
Discussants
Scott Kominers Harvard Business School
5:15 to 5:30 Open Discussion & Day 1 Closing Remarks

OCTOBER 29, 2018
9:00 to 10:00 Deforestation
Seema Jayachandran Northwestern University
Discussants
Alexander Teytelboym Department of Economics, University of Oxford
10:00 to 10:15 Break
10:15 to 11:15 Advice to Farmers
Shawn Cole Harvard University
Discussants
Shengwu Li Harvard University
11:15 to 11:30 Break
11:30 to 12:30 Labor Markets
Simon Quinn University of Oxford
Discussants
Eva Meyersson Milgrom Stanford University
12:30 to 1:30 Lunch
1:30 to 2:30 Coffee Commodity Markets
Ashok Rai Williams College
2:30 to 3:00
Discussion & Closing Remarks

Repugnance watch: Blasphemy no longer unconstitutional in Ireland, as of yesterday

Here's the story in The Guardian:
Ireland votes to oust ‘medieval’ blasphemy law
Decision is latest in ‘quiet revolution’ of seismic social and political changes in the country

"Campaigners in Ireland celebrated the end of a “medieval” ban on blasphemy on Saturday, after voters overwhelmingly supported a referendum to remove the offence from the constitution.

"Almost 65% of voters supported the move – a total of 951,650 people – with just over 35% (515,808) in favour of retaining it, on a turnout of just over 43%.
...
"The government had already laid out legislation to remove the offence of blasphemy from the constitution and all relevant laws, should the referendum be passed.

"It has been more than 150 years since anyone was prosecuted for blasphemy in Ireland, but the country had passed a blasphemy law in 2009, making it the only western democracy to bring in new legislation in the 21st century."

University of Virginia celebrates Charlie Holt

Thomas Jefferson would be proud:

"During the ceremony in the John Paul Jones Arena, held in conjunction with Family Weekend, UVA President Jim Ryan presented two Thomas Jefferson Awards – one for excellence in scholarship, to Charles A. Holt, A. Willis Robertson Professor of Political Economy in the Department of Economics and professor of public policy in the Frank Batten School of Leadership and Public Policy; and one for service to Richard M. Carpenter, patient care services manager at the UVA Medical Center. The awards are the highest given by UVA to a member of the University community."

Incentives can save lives (Washington Post op-ed with Congressman Cartwright)

The Washington Post published this week an opinion piece I coauthored with Congressman Matt Cartwright of Pennsylvania, in support of the new legislation he has proposed, H.R.6448 - Organ Donation Clarification Act of 2018.

Our piece ran under the headline
Student loan forgiveness and other incentives could save lives. Here’s how.
By Matt Cartwright and Al Roth
October 25
Matt Cartwright, a Democrat, represents Pennsylvania’s 17th District in the House. Al Roth, a professor at Stanford University, won the 2012 Nobel Prize in economics.

Here's the text as in ran in the paper:

"Every day 20 Americans will die waiting for an organ transplant, 13 of them waiting for a kidney. Hundreds of thousands will undergo painful and debilitating dialysis treatments to extend their lives in the hope that a kidney will eventually become available.

We are quickly marching in the wrong direction. As of mid-October,95,000 people remain on the kidney waiting list. Each year, approximately 17,000 patients are lucky enough to receive a transplant; however, 35,000 new patients are added annually to the national waitlist.

The average wait time for a new kidney is approaching five years , unless you have a family member or friend who can serve as your donor. During this time, your activity will be limited due to your fragile condition, and your schedule will be dictated by four-hour dialysis sessions several times a week. Because of this, 77 percent of dialysis patients are unemployed and reliant on social services.

The pain, suffering and death are overwhelming. And so is the cost: roughly 7 percent of the Medicare budget. Dialysis, on its own, costs Medicare more than $87,000 per patient per year. A kidney transplant, on the other hand, pays for itself in less than two years and saves an average of more than $745,000 in medical costs over a 10-year period, with 75 percent of those savings going to the taxpayers. If the supply of transplant kidneys could be increased to meet the demand, taxpayers would save more than $12 billion per year in medical costs.

Solving the organ and kidney waiting list issue is a true win-win: changing the lives of those suffering from kidney failure while relieving a significant burden on the American taxpayer.

Innovations in science and health-care management have undoubtedly increased donations. Last decade, groundbreaking registries and matching programs were created to allow incompatible patient-donor pairs to join a pool of other patients and donors so that each patient received a compatible kidney. The kidney-exchange model has saved thousands of lives and helped earn one of the co-authors of this article a Nobel Prize in economics.

The kidney wait list is now one and a half times the size it was in 2004, when the New England Program for Kidney Exchange began. This is partly because medical progress extending the lives of those on dialysis has failed to address the fundamental issue of organ failure. Meanwhile, innovation in our approach to transplantation has not kept pace with dramatic increases in the demand for kidneys. We are clearly in need of a new approach. Effective legislation can help solve the problem.

The Organ Donation Clarification Act, introduced by the other co-author of this article, proposes a new and innovative path toward increasing both deceased and living organ donation. The bill clarifies the definition of a “valuable consideration” — cash payments for donation, which are currently prohibited for organ donors — to eliminate misunderstandings and delays in reimbursement for valid donation-related expenses, which have hampered living organ donation. This bill also allows government-run, ethics-board-approved pilot programs to test the effectiveness of providing noncash incentives to promote organ donation.

What might such pilot programs look like? Perhaps a living donor might receive health insurance, forgiveness of student loans, a donation to a charity of choice, a contribution to retirement savings. The family of a deceased donor might get funeral benefits.

We do not know exactly what the effects of incentives would be on organ donation, which is exactly why these pilot programs are necessary. Would they help? What incentives would be most effective? What are the unforeseen circumstances? Let’s allow the scientific community to experiment, test creative solutions and see what might solve this crisis.

Public opinion firmly supports compensating organ donors. The pilot programs under the bill would ensure the noncash incentives would not come from the organ recipient and that organs would be distributed fairly, in the same manner they are now. With those parameters, more than 80 percent of people in a recent national academic study of nearly 3,000 voiced their support for a successful program of compensating organ donors.

There are many factors to consider when tackling the issue of organ donation. We must preserve dignity, avoid exploitation and be careful about incentives. We must ensure that the poor and desperate are not treated unfairly.

We can do this right, and these pilot programs will help us get answers to fix the organ shortage that costs us 20 American lives every day. We can save lives, end suffering and save billions in the process. The time to act is now."
**************

The bill is is designed to make healthcare more accessable. And it is pro-science as a way for finding out how to do this.  It is likely that it will meet with some opposition ... but it's good to know that we have representatives like Mr. Cartwright who keep trying.

Computational advances for hard matching problems

Computational complexity theory focuses on worst case examples to identify hard problems, but the good news is that the instances that arise in practice of the (potentially) hard problems identified in this way can often be solved pretty efficiently. Here are some new techniques for doing that, from Scottish researchers:

Mathematical models for stable matching problems with ties and incomplete lists
by Maxence Delorme, Sergio Garcia, Jacek Gondzio, Joerg Kalcsics, David Manlove, and William Pettersson

Abstract: We present new integer linear programming (ILP) models for N P-hard optimisation problems in instances of the Stable Marriage problem with Ties and Incomplete lists (SMTI) and its many-to-one generalisation, the Hospitals / Residents problem with Ties (HRT). These models can be used to efficiently solve these optimisation problems when applied to (i) instances derived from real-world applications, and (ii) larger instances that are randomly generated. In the case of SMTI, we consider instances arising from the pairing of children with adoptive families, where preferences are obtained from a quality measure of each possible pairing of child to family. In this case we seek a maximum weight stable matching. We present new algorithms for preprocessing instances of SMTI with ties on both sides, as well as new ILP models. Algorithms based on existing state-of-the-art models only solve 6 of our 22 real-world instances within an hour per instance, and our new models solve all 22 instances within a mean runtime of 60 seconds. For HRT, we consider instances derived from the problem of assigning junior doctors to foundation posts in Scottish hospitals. Here we seek a maximum size stable matching. We show how to extend our models for SMTI to the HRT case. For the real instances, we reduce the mean runtime from an average of 144 seconds when using state-of-the-art methods, to 3 seconds when using our new ILP based algorithms. We also show that our models outperform considerably state-of-the-art models on larger randomly-generated instances of SMTI and HRT

Building kidney exchange in Europe

Here's a report, in the journal Transplantation (the full published paper is available at the link at bottom):

Building Kidney Exchange Programmes in Europe – An Overview of Exchange Practice and Activities
Biró, Péter1; Haase-Kromwijk, Bernadette2; Andersson, Tommy3; Ásgeirsson, Eyjólfur Ingi4; Baltesová, Tatiana5; Boletis, Ioannis6; Bolotinha, Catarina7; Bond, Gregor8; Böhmig, Georg8; Burnapp, Lisa9; Cechlárová, Katarína10; Di Ciaccio, Paola11; Fronek, Jiri12; Hadaya, Karine13; Hemke, Aline2; Jacquelinet, Christian14; Johnson, Rachel9; Kieszek, Rafal15; Kuypers, Dirk16; Leishman, Ruthanne17; Macher, Marie-Alice14; Manlove, David18; Menoudakou, Georgia19; Salonen, Mikko20; Smeulders, Bart21; Sparacino, Vito11; Spieksma, Frits16; de la Oliva Valentín Muñoz, María22; Wilson, Nic23; vd Klundert, Joris24 on behalf of the ENCKEP COST Action

Transplantation: September 21, 2018 - Volume Online First

Update: here's the published reference and link:

Biró, P., Haase-Kromwijk, B., Andersson, T., Ásgeirsson, E. I., Baltesová, T., Boletis, I., ... & van der Klundert, J. (2019). Building kidney exchange programmes in Europe—an overview of exchange practice and activities. Transplantation, 103(7), 1514.

Game Theory and Applications in Lisbon, October 25-27, 2018

The Lisbon Meetings in Game Theory and Applications #10. The Anniversary Edition​. October 25-27, 2018

The program is here.

I'll be speaking at noon on Friday, with a working title of
Game theory in a large world:  Market design, and the example of kidney exchange

The announcement says:
"The UECE Lisbon Meetings in Game Theory and Applications are an annual event that brings together leading scholars doing theoretical or applied research in the field of game theory.

The first edition of the conference took place in 2009 and throughout the years it has become a reference event in the field, attracting renowned academics from all over the world.

In the tenth edition of the Lisbon Meetings, we are pleased to announce four keynote lectures  by

Prof. Itzhak Gilboa (HEC, Paris-Saclay, and Tel-Aviv University)
Prof. Itay Goldstein (University of Pennsylvania)
Prof. Alvin E. Roth (Stanford University)
Prof. Larry Samuelson (Yale University)

Prof. Gilboa will present the annual lecture in honor of the preeminent game theorist Jean-François Mertens

The organizing Committee
​
Filomena Garcia (Indiana University, ISEG/UECE)
Luca David Opromolla (Banco de Portugal, UECE)
Joana Pais (ISEG, UECE)
Joana Resende (CE-FUP, University of Porto)"


I also plan to give a short talk at a ceremony this evening,  about markets and market design along the lines of my book Who Gets What and Why (which was translated into Portugese as Como Funcionam Os Mercados }.


Here's a news story:
Teoria dos Jogos revoluciona ciência, economia e vida em sociedade
Prémio Nobel Alvin E. Roth cruza Teoria dos Jogos e transplante de rins

Ethics and Welfare Conference at Penn, Oct 26-7

" This conference will be the third in a series. The first was funded by the Becker-Friedman Institute at the University of Chicago in 2014, and the second was at the Harvard Business School.  Videos and papers from the previous conferences can be found at https://bfi.uchicago.edu/events/normative-ethics-and-welfare-economics and https://www.hbs.edu/faculty/conferences/2016-newe/Pages/schedule.aspx

"This conference is divided into seven main sessions, each devoted to a different normative question. In each session, both economic and philosophical perspectives will be presented, and ample time will be provided for audience discussion. The conference will close with a distinguished panel of economists and philosophers, who will discuss the themes raised by the conference."

Here's the program:

Friday, October 26, 2018
8:15-8:45      Breakfast

8:45-9:00      Opening Remarks

Benjamin Lockwood, University of Pennsylvania
Itai Sher, University of Massachusetts Amherst
9:00-10:30      Session 1: Ethics and Economics of Climate Change

Dale Jamieson, New York University
Christian Traeger, University of Oslo
Discussant: Arthur Van Benthem, University of Pennsylvania
10:30-11:00      Break

11:00-12:30      Session 2: Normative Uncertainty and Normative Diversity

Stefan Riedener, University of Zurich (Paper)
Itai Sher, University of Massachusetts Amherst (Paper)
Discussant: Christian Tarsney, University of Groningen
12:30-2:00      Lunch

2:00-3:30      Session 3: Preferences for Redistribution and Moral Psychology

Raymond Fisman, Boston University (Paper)
Fiery Cushman, Harvard University (Paper)
Discussant: Geoffrey Goodwin, University of Pennsylvania
3:30-4:00      Break

4:00-5:30      Session 4: Poverty, Inequality, and Health

Martin Ravallion, Georgetown University (Paper)
Jennifer Prah Ruger, University of Pennsylvania (Paper)
Discussant: Mark Pauly, University of Pennsylvania
5:30-6:30      Break

6:30-9:00      Conference Dinner (for speakers and discussants)

Saturday, October 27, 2018.
8:30-9:00      Breakfast

9:00-10:30      Session 5: Behavioral Welfare Economics and Paternalism

Benjamin Lockwood, University of Pennsylvania (Paper)
Erik Angner, Stockholm University
Discussant: Douglas Mackay, University of North Carolina at Chapel Hill
10:30-11:00      Break

11:00-12:30      Session 6: Algorithms, Data and the Public Good

Rakesh Vohra, University of Pennsylvania (Paper)
Helen Nissenbaum, Cornell University
Discussant: Daniel Singer, University of Pennsylvania
12:30-1:30      Lunch

1:30-3:00      Session 7: Happiness and Social Welfare

Kristen Cooper, Gordon College
Dan Haybron, Saint Louis University (Paper)
Discussant: Alex Rees-Jones, University of Pennsylvania
3:00-3:30      Break

3:30-5:00      Closing Panel

Ruth Chang, Rutgers University
Joel Sobel, University of California, San Diego
John Broome, University of Oxford
Steven Sheffrin, Tulane University
Moderator: Amy Sepinwall, University of Pennsylvania

Axel Ockenfels on Economic Engineering: Public Lecture in NYC tomorrow, Oct 23

Axel Ockenfels will be speaking in New York City tomorrow...

A LEIBNIZ LECTURE:
ECONOMIC ENGINEERING OF HUMAN COOPERATION AND COMPETITION

"What do climate change, shortage of organ donors, and traffic congestion have in common? They can all be addressed with behavioral economics. Join us for a lecture by Leibniz Prize recipient Professor Axel Ockenfels.

"Many economic and societal challenges can only be addressed with a change in human behavior. Market design can offer solutions because market rules affect our behavior in predictable ways. Traffic jams, for example, cost time, money and impact our health, while recent advances in technology would allow for the design of new markets for road use that promote cooperation and prevent congestion. Climate change is fundamentally a problem of insufficient cooperation that can be addressed if recognized as such and acted on accordingly in international climate negotiations.

"In his lecture, Professor Ockenfels will show how market rules can be engineered to promote cooperation and trust even in large communities and to encourage competition in small markets. Professor Ockenfels’ focus will be on human behavior in markets, which responds to market rules, but rarely in a fully rational way. He will show how market design can take on real-world challenges."

October 23 2018 | 06:30 PM until 08:00 PM

German House, 871 United Nations Plaza, New York, NY 10017,
Organizer: German Center for Research and Innovation (DWIH NY)

Market design to reduce inequality

The closing talk at the NBER market design conference was delivered by Scott Kominers, on the general theme that we may not care for fully competitive markets (and might prefer some use of price controls and rationing) for markets involving e.g. sellers who are relatively poor compared to buyers, since competition can exacerbate wealth inequality:

Redistribution through Markets
Piotr Dworczak, Scott Duke Kominers, Mohammad Akbarpour


Abstract: When macroeconomic tools fail to respond to wealth inequality optimally, regulators can still seek to mitigate inequality within individual markets. A social planner with distributional preferences might distort allocative efficiency to achieve a more desirable split of surplus, for example, by setting higher prices when sellers are poor -- effectively, using the market as a redistributive tool.

In this paper, we seek to understand how to design goods markets optimally in the presence of inequality. Using a mechanism design approach, we uncover the constrained Pareto frontier by identifying the optimal trade-off between allocative efficiency and redistribution in a setting where the second welfare theorem fails because of private information and participation constraints. We find that competitive equilibrium allocation is not always optimal. Instead, when there is substantial inequality across sides of the market, the optimal design uses a tax-like mechanism, introducing a wedge between the buyer and seller prices, and redistributing the resulting surplus to the poorer side of the market via lump-sum payments. When there is significant within-side inequality, meanwhile, it may be optimal to impose price controls even though doing so induces rationing.

Matching with complex constraints

At the NBER market design conference yesterday, Fuhito Kojima spoke about his paper with Yuchiro Kamada on matching with 'upper bound' constraints of the kind that occur in matching children to day care in Japan.

Here's the paper:

FAIR MATCHING UNDER CONSTRAINTS: THEORY AND
APPLICATIONS by YUICHIRO KAMADA AND FUHITO KOJIMA

Abstract. This paper studies a general model of matching with constraints. Observing that a stable matching typically does not exist, we focus on feasible, individually rational, and fair matchings. We characterize such matchings by fixed points of a certain function. Building on this result, we characterize the class of constraints on individual schools under which there exists a student-optimal fair matching (SOFM), the matching that is the most preferred by every student among those satisfying the three desirable properties. We study the numerical relevance of our theory using data on governmentorganized
daycare allocation.