Unraveling of tech recruiting

Revenge of the Nerds: Tech Firms Scour College Campuses for Talent


"On college campuses these days, the top nerds are getting a taste of what it's like to be star jocks.

"For Maxwell Hawkins, a computer science and art major at Carnegie Mellon University, the moment came in March. A technology recruiting firm sent him a letter by FedEx urging him to drop out of his junior year and take his talents to work for a start-up.
... "The technology boom has created an acute shortage of engineers and software developers. The industry has responded by taking a page from the playbook of professional sports: identify up and comers early, then roll out the red carpet to lock them up.

"With the social media frenzy in full swing, promising students are now wrestling with decisions about whether to stay in school or turn pro.
...
"The National Basketball Association has a rule called "one and done" that requires players entering the draft to be 19 or have completed their freshman year of college. But some prospective programmers aren't even making it that far.

"Sahil Lavingia was a freshman at the University of Southern California in 2010 when he got an email from Ben Silbermann, chief executive and co-founder of the fast-growing online scrapbook Pinterest. Mr. Silbermann was looking for help building a version of Pinterest for the iPhone and happened upon a data tracking app developed by the self-taught Mr. Lavingia.

"Figuring the young student "seemed like a go-getter," Mr. Silbermann drove up to Berkeley from Silicon Valley to meet Mr. Lavingia, who was coming to the Bay Area for the USC-Berkeley football game. A few days later, Mr. Lavingia had an offer in hand and took a leave from school to take the job.

"Some companies are grabbing talented programmers even before they reach college. Luke Weber taught himself how to design computer games in high school and became one of the most popular contributors to Roblox Corp., a company that lets its subscribers play games developed by its users.

"After graduating, he attended a Roblox conference last June and met the head of the company's marketing department, who asked him if he wanted to shoot some videos to teach people how to make games. The videos turned into a design job, and now Mr. Weber, who has postponed plans to go to college, works three days a week for the company producing games and virtual goods for $25 an hour.

"At 18, he is the youngest employee of the company."

Girls' lacrosse camps and college admissions

College admissions begins early for high school and even middle school athletes, not just in big money sports like men's football and basketball, but for many sports, including women's lacrosse. Some of it starts with summer camps:
Northwestern Takes Game Directly to Eastern Recruits

"Northwestern has developed a following in the Northeast thanks to a pipeline built by Coach Kelly Amonte Hiller, who holds girls lacrosse camps in New York and Massachusetts each summer.

"Amonte Hiller, who also runs camps at Northwestern, said her main focus was promoting the sport. But she is aware of the other benefits, as more than half of her players during the past 11 years have been former campers. Of the 34 current Wildcats, 24 are from New York, New Jersey or Massachusetts. 

...

"Coaches routinely run summer camps at their universities. They are a way to raise money and visibility while serving as an initial meet-and-greet with potential recruits.

"But it is uncommon for a coach to take a camp out of state. Stacey Osburn, an N.C.A.A. spokeswoman, said basketball camps must be held within 100 miles of the university, and a football camp must be held in the university’s state or within 50 miles of its campus.

There are no restrictions for lacrosse camps, Osburn said. And since high school lacrosse’s densest and most talent-rich areas are still in the Northeast, out-of-town camps are an attractive option for coaches. 

...

“The first camp I went to, Kelly came right up and introduced herself,” said the senior midfielder Alex Frank, a Westwood graduate. “It had a big impact, having that relationship with her when I was just entering middle school. And as I got older, I knew what her coaching style was and I was comfortable with her.”

"Wildcats midfielder Shannon Smith, a native of West Babylon, N.Y., started attending Amonte Hiller’s camp on Long Island as a fifth grader.

“Kelly would walk around to all the different fields making sure she knew the kids,” said Smith, a 2011 Tewaaraton Award winner. “You were always shocked how she knew a lot of the kids before camp even started.” 

Why can't college athletes be paid?

The NY Times Sunday Magazine on how anomalous it is that we regard paying college athletes as repugnant: Let's Start Paying College Athletes

"The hypocrisy that permeates big-money college sports takes your breath away. College football and men’s basketball have become such huge commercial enterprises that together they generate more than $6 billion in annual revenue, more than the National Basketball Association. A top college coach can make as much or more than a professional coach; Ohio State just agreed to pay Urban Meyer $24 million over six years. Powerful conferences like the S.E.C. and the Pac 12 have signed lucrative TV deals, while the Big 10 and the University of Texas have created their own sports networks. Companies like Coors and Chick-fil-A eagerly toss millions in marketing dollars at college sports. Last year, Turner Broadcasting and CBS signed a 14-year, $10.8 billion deal for the television rights to the N.C.A.A.’s men’s basketball national championship tournament (a k a “March Madness”). And what does the labor force that makes it possible for coaches to earn millions, and causes marketers to spend billions, get? Nothing. The workers are supposed to be content with a scholarship that does not even cover the full cost of attending college. Any student athlete who accepts an unapproved, free hamburger from a coach, or even a fan, is in violation of N.C.A.A. rules."

Unraveling of college football recruiting

Two articles on unraveling in college football recruiting:
Timing is everything with offers: How programs wrestle between getting evals while also making prospects feel wanted

"While coaches like Dooley face challenges to offer early in a prospect's junior year, other coaches have to ramp it up even further. Georgia coach Mark Richt said not offering an in-state prospect can put the Bulldogs in a permanent trail position for a prospect.
"Our biggest problem at Georgia is trying to make those evaluations properly and making those offers," Richt said. "It does put pressure on us sometimes to offer a guy a bit sooner than you'd like to. I think everybody across the board has to project a little more. You have to hope that we've made the right projection.
"If you get your class nailed down a year in advance and all of a sudden some of those guys didn't keep progressing like you thought and some other guys came up, [you say] 'Man, I wish I had waited and offered that kid because I like this guy better than I like that guy.' Some people find a way to dump that guy and take that [other] guy. At Georgia, if we offer and he commits to us, we're not dumping him."

********

Iowa recruit not old enough to drive (HT: David Backus)
"Football programs are increasingly entering the territory of basketball scholarship offerings. John Allen was told twice last week Iowa was on the verge of offering his son Brian a football scholarship. John Allen didn't believe it either time. Brian Allen was after all only a high school freshman and had never played varsity football. But on Monday, John Allen called Iowa coach Kirk Ferentz as he was advised, and Ferentz confirmed that he would like to extend a scholarship offer to Brian Allen. "We're all kind of amazed by it," John Allen said. "I don't think it's sunk in yet. He's 15 years old. He can't drive a car yet, etc."
***********

One impetus behind the unraveling of markets is that people make early offers to avoid being left behind as others make even earlier offers. As Yogi Berra said (in a different context), "it gets late early out there."

Hockey: the NHL draft is different

Yesterday's post, with an update at the bottom...

Four Harvard Freshmen Selected in NHL Draft

"Months before they’ll put on a Harvard uniform for the first time, four incoming Crimson freshmen were chosen in Saturday’s National Hockey League draft.

With these four additions, there will be eight NHL draftees on Harvard’s roster going into the 2011-12 season.

"The structure of the NHL draft differs from that of the other three major American sports. Unlike in MLB, the NBA, and the NFL, players selected by NHL teams can continue to compete on the amateur level while remaining the protected picks of the team that originally selected them.

Baseball, football, and basketball prospects are forced to choose between signing a professional contract or retaining amateur status and NCAA eligibility shortly after the draft."
********

Can someone fill us in  on why the NHL works this way? i.e. why do pro hockey draftees include students who are about to go to college?
*********
Update (Friday, July 29):

Jaron Cordero writes with some relevant detail:

"NFL draft: to be eligible players must be out of high school for at least three years.

NBA draft: you have to be 19 years old to be eligible.

--So a student can't enter either draft before entering college.

NHL and MLB: you can be "drafted" and still retain NCAA eligibility. In fact, there are plenty cases each year where a player fresh out of high school will get drafted by a major league baseball franchise, but instead choose to play college baseball.

The difference between the NHL and MLB is their respective collective bargaining agreements:

The MLB's requires a team to sign their drafted player in order to retain exclusive right of negotiation for his services. NCAA legislation states that an athlete's amateur status is forfeited if he/she signs a contract with a professional team.

On the other hand, the NHL's CBA allows teams to retain the exclusive right of negotiation of a drafted player until the summer after the athlete graduates from college. Thus, the athlete is not forced to sign any contract with a professional team; therefore he keeps his status as an amateur."

Thanks, Jaron.

So...now I'm puzzling over a new set of questions, e.g. why are the agreements so different? E.g. in MLB, they seem to think that playing in the minors is the way they want to develop players, in contrast to football, where players often develop in college. (Maybe because for football you have to see how big they are going to be when full grown?)  Is hockey somewhere in between?

Report from the front on the war for talent

From a recent NY Times article on recruiting in Silicon Valley:

"Two executives at a small start-up who spoke on the condition of anonymity said it recently lost an intern when one of the biggest start-ups offered the candidate a 40 percent bump in stock options, potentially worth hundreds of thousands of dollars — but only if the candidate accepted the job before hanging up the phone.

“The atmosphere is brutally competitive,” said Keith Rabois, a Silicon Valley veteran and chief operating officer at Square, where Mr. Firestone works. “Recruiting in Silicon Valley is more competitive and intense and furious than college football recruiting of high school athletes.”
...
"Tech recruiters have also expanded their searches. They still scout college campuses, particularly Stanford’s computer science department, where this year it was common for seniors to receive half a dozen offers by the end of first semester. But since college degrees are not mandatory, recruiters are also going to computer coding competitions and parties, in search of talent that is reminiscent of the dot-com mania."

Does anyone know some talented high school PHP, Ruby and Python programmers? (Or maybe they are already teaching those things in kindergarten?)

College football is big business (who knew?)

The Chronicle reports on just how big a business college football has become  With an Assist From Alabama, Southeastern Conference Breaks the $1-Billion Mark

"Thanks to a lucrative television contract and robust earnings generated by several highly ranked football teams, the 12 athletic programs in the league brought in $1,006,798,094 during the 2009-10 fiscal year, according to new data from the Education Department. That's about an 11-percent increase from the previous year and a nearly 77-percent bump from six years ago.
The league's biggest boost came from the University of Alabama, where revenues spiked by 24 percent in 2009-10, to $129.3-million. With its increase, Alabama leapfrogged Ohio State University and the University of Florida to reach No. 2 on the list of biggest revenue-producing programs in all of college sports. The University of Texas, which brought in $143.6-million, remains No. 1."
...
"Still, as revenues have grown, so have expenses: Even though each of the top 20 moneymakers in college sports pulled in more than $75-million last year—eight programs alone made more than $100-million—that doesn't mean all of them turned a profit. Of the 120 athletic programs in Division I-A, all but 14 operated with a deficit*. (For a list of the top 100 earners, see this LSU fan blog, which first reported on the conference's crossing the billion-dollar mark.)"

*"Institutions in Division I-A, which include some of the biggest and wealthiest athletics programs in the NCAA, allocated a median of $10.2-million to their athletic departments in the 2009 fiscal year, according to the NCAA’s annual analysis of Division I financial data. That allocation was an increase from the median of $8-million that universities provided to sports program during the previous year."

College football teams are hard to rank

At least that's the conclusion of a recent NY Times article, Who’s No. 1?, written before the Thanksgiving weekend games were played.  It begins by noting

"This is the 13th year of the Bowl Championship Series, the byzantine and unpopular system that is supposed to guarantee that the college-football season ends with a championship game between the sport’s two best teams. Comparing teams that usually do not play one another — there are 120 major college-football programs, and each one competes in just 12 games each season — was never going to be easy. Like three egg rolls served to a party of four at a Chinese restaurant, the portions never seem to divide up quite as neatly as they should. This year, for instance, four programs — Oregon, Auburn, Boise State and Texas Christian — have spent much of the season in contention for the two positions in the championship."
...
"In addition to the championship game, the B.C.S. involves four beauty-contest games: the Fiesta, Orange, Rose and Sugar bowls. In the last four years, the teams ranked lower than their opponents by the B.C.S. formula have won 12 of the 20 games established by the system. The putative underdog has also won 6 of the last 8 title games: last year’s championship, in which the higher-rated Alabama defeated Texas, was something of a novelty. If the No. 2 team routinely beats the No. 1 team, it’s worth asking whether the B.C.S. rankings are valid.
...
"Without high-quality out-of-conference games, every major conference is in essence an island unto itself. We can identify the best team in the Pac 10, or the best team in the S.E.C. But we don’t have any good way of comparing the Pac 10 against the S.E.C., or against any other conference. It doesn’t matter how smart your computer rankings are, or how wizened the participants in your poll: there simply isn’t enough worthwhile data to work with."


I've written earlier posts about college football bowls, and how the present system arose in part out of an effort to roll back the unraveling of dates at which teams and bowls were matched...

The WSJ on the football draft and market design

Writing in the Sports section of the Wall Street Journal, Reed Albergotti considers the NFL player draft, and some possible alternatives.
Why the NFL Draft Drives Economists Crazy
Fixed Costs, Variable Talent and Changes in the College Game Make Big Mistakes Unavoidable; Time for an Auction?

In an accompanying graphic, he writes "Harvard researchers Lucas Coffman, Itai Ashlagi, and Itay Fainmesser came up with an alternative based on an idea called a simultaneous ascending auction."

Along the way, the article has some nice things to say about market design.
"Thanks to market design, medical-school students are matched with hospitals through a complicated computer algorithm. Governments use "communal auctions" to distribute things like cellular bandwidth to telecommunications companies. Even the New York City public schools have used market economics to ensure parity in its school-choice system. "
...
"Three researchers at Harvard Business School—who studied under Alvin Roth, a Harvard professor and a pioneer in market-design theory—have proposed an alternative to the NFL draft.
Under their plan, all 32 teams would be given seven picks. They would have to abide by a spending cap that would go higher to lower—with the worst team (based on its record the previous season) having the most money to spend. When the bidding opened, the most sought-after players would draw multiple bids. Teams could then raise their bid as high as they'd like for a player they coveted.
Theoretically, a team could get any player it wanted—so long as it was prepared to pinch pennies on everyone else. Meanwhile, a team that didn't want to break the bank on any particular player could pick up lots of useful parts by spreading its money around evenly. Teams could also thrive by focusing on the bidding and looking for bargains.
"I think that it would significantly help teams get the right guys," said Lucas Coffman, one of the study's authors. If nothing else, Mr. Coffman said, the auction format might be more exciting than the draft, which allows for long gaps between picks.
In any case, there's some evidence the draft could be the next fix for a league that fixes everything. One NFL executive said patience is running thin. "There's a huge trail littered with guys who got the big dollars but were a bust," this person said."

Postscript: Luke Coffman, Itai Ashlagi, and Itay Fainmesser were all on a differently organized labor market this year, and will be at Ohio State, MIT Sloan, and Brown next year.

For another take on the design of the NFL labor market, by another recent Harvard grad Gregor Matvos, see his paper "Renegotiation Design: Evidence from NFL roster bonuses."

Update: Luke Coffman points out that the allocation of tickets to attend tonight's NFL draft could use some market design, and he points me to this, on Craigslist.
Experienced line sitter available to get tickets for NFL Draft - $75 (Midtown)
"I am an experienced line sitter who has worked many events. I am always on line early to secure tickets. I will be available to stand in line for tickets for the 1st 2 nights of the NFL Draft at Radio City Music hall. The procedure is as follows I will line up the evening before to get my wristband and will be back on line in order to get the tickets at 5:15 the day of the draft. The gates at Radio City will open at 6 p.m. each night. My charge for this service is $75 per ticket I can also bring people with me to secure extra tickets if you need more than 1, Please reply with the night(S) you want tickets for and how many tickets you need. Round 1 will be held Thursday night April 22nd and rounds 2-3 will be held Friday April 23rd. "

Unpaid workers: athletes and interns

Several blogs and news stories follow unpaid parts of the labor force, college athletes and student interns.

For Love of The Game (And The Money) from The Faculty Lounge by Kim Krawiec and Against the NCAA Cartel from The Volokh Conspiracy by Ilya Somin both consider the unpaid status of college athletes. The latter story explicitly mentions the high salaries of college coaches in basketball and football to indicate that these are profit making entertainment businesses despite the fact that the workers/players/students are unpaid.

There has also been a good deal of attention to the recent NY Times story headlined Growth of Unpaid Internships May Be Illegal, Officials Say

"With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor. "...

"Ms. Leppink said many employers failed to pay even though their internships did not comply with the six federal legal criteria that must be satisfied for internships to be unpaid. Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer “derives no immediate advantage” from the intern’s activities — in other words, it’s largely a benevolent contribution to the intern.
No one keeps official count of how many paid and unpaid internships there are, but Lance Choy, director of the Career Development Center at Stanford University, sees definitive evidence that the number of unpaid internships is mushrooming — fueled by employers’ desire to hold down costs and students’ eagerness to gain experience for their résumés. Employers posted 643 unpaid internships on Stanford’s job board this academic year, more than triple the 174 posted two years ago.
In 2008, the National Association of Colleges and Employers found that 83 percent of graduating students had held internships, up from 9 percent in 1992. This means hundreds of thousands of students hold internships each year; some experts estimate that one-fourth to one-half are unpaid. "

Some regulatory guidance from California: California Labor Dept. Revises Guidelines on When Interns Must Be Paid
"Many wage and hour regulators maintain that interns must be paid if their work is of “immediate advantage” to the employer, but the California agency’s top lawyer advised that such an advantage can be offset — and the intern not be paid — if the employer provides close supervision and lays out money for training.
Over all, the guidance from the California Division of Labor Standards Enforcement was emphatic that for internships to be unpaid, they must be educational and predominantly for the benefit of the intern, not the employer. "

Some of these discussions have something in common with the discussions in the transplant community about compensation for donors.

Unraveling in college football

We're used to hearing of career decisions by very young basketball players, but there's been a tradition in football of waiting until players' adult weights could be estimated. But now (multiple readers point out to me), the Trojans of USC have recruited 13 year old quarterback David Sills to their entering class in 2015.

Unraveling has a fine sporting tradition.

College football and the BCS as a political football

The WSJ reports today: U.S. May Examine College Footbal Bowl System
"Sen. Orrin Hatch (R.-Utah) said he received a letter from the Justice Department, in which it "outlined the inequities" of the BCS system and said that it is considering whether to investigate the BCS under the antitrust laws. The letter also said that the administration is exploring other options to address college football's postseason, including encouraging the NCAA to take control and asking the Federal Trade Commission to examine the BCS's legality under consumer-proteciton laws.
Shortly after he was elected in November 2008, Barack Obama said he would "throw my weight around a little bit" regarding college football's lack of playoff system. Currently, the BCS stages a national title game between the two teams that finish atop a compilation of polls, while other arguably deserving teams often get excluded. Mr. Hatch, whose home-state Utah Utes were left out following the 2008 season despite a perfect record, has been advocating for changes, too, writing a letter to the president in October asking for an antitrust investigation."

The article goes on to quote the BCS director as saying we've seen this before: ""There is much less to this letter than meets the eye," Mr. Hancock said. "The White House knows that with all the serious issues facing the country, the last thing they should do is increase the deficit by spending money to investigate how the college football playoffs are played. With all due respect to Sen. Hatch, he is overstating the importance of the letter he received from the Office of Legislative Affairs." "

Here are my previous posts on the BCS and the serious business of college football.

Senate Judiciary Committee and College Football Playoffs

The United States Senate Committee on the Judiciary had the following item on its home page yesterday:
"Did You Know? The Senate Judiciary Committee conducted 104 hearings and business meetings in the 110th Congress, more than any other Senate Committee"

There is only one meeting so far on next week's calendar:
Tuesday 7/7/2009
Subcommittee on Antitrust, Competition Policy and Consumer Rights
"The Bowl Championship Series: Is it Fair and In Compliance with Antitrust Law? "

Here's the AP story: Senate to Hold Hearing on College Football's BCS
"The Senate plans to hold a hearing next week looking into antitrust issues surrounding the Bowl Championship Series. It's the second time this year that Congress is shining a light on the polarizing system college football uses to crown its national champion."
...
"Sen. Orrin Hatch of Utah, the subcommittee's top Republican and the lawmaker who sought the hearing, did not return telephone and e-mail messages left at his office Tuesday.
In an essay for Sports Illustrated being released Wednesday, Hatch wrote that the Sherman Antitrust Act prohibits contracts, combinations or conspiracies designed to reduce competition.
''I don't think a more accurate description of what the BCS does exists,'' Hatch wrote. He noted that six conferences get automatic bids to participate in series, while others do not. The system, he argued, ''intentionally and explicitly favors certain participants.''
...
Football fans in Hatch's state were furious that Utah was bypassed for the national championship despite going undefeated in the regular season. Hatch noted that President Barack Obama and others have called for the BCS to be replaced with a playoff system."
...
"David Frohnmayer, president of the University of Oregon and chairman of the BCS Presidential Oversight Committee, expressed a preference Tuesday for the current system, saying the proposals for a playoff system ''disrespect our academic calendars, and they utterly lack a business plan.'' "

College football bowls used to be an unravelled market, and, whatever its other flaws, the BCS system has largely eliminated that problem. While I'm rooting for the Judiciary Committee in their own competition to hold the most hearings, I hope that their efforts will not do too much harm to one of the main reasons we have colleges.

"Yield" in college admissions

The Chronicle of Higher Education has a thoughtful article: What Yield Says About a College:

"As usual, some colleges had to do much more than others to fill their classes, a fact that complicates interpretations of yield.
For instance, two colleges may have ended up with identical yield rates. College A did not admit a single applicant early, but College B enrolled a third of its class through early decision, which guarantees a yield of virtually 100 percent for students in that pool.
“Any meaning that yield ever had is now gone, because the number can be manipulated,” says Daniel M. Lundquist, vice president for marketing and enrollment management at the Sage Colleges, in New York. “It’s a circus, and colleges all do admissions differently.”
How many applicants did a college have? How many did it admit? Did it use a waiting list? How big was its tuition-discount rate? And did its football team win the conference title last year?
The answers to such questions are necessary to put yield in context. Some universities, such as large flagships in the Midwest, have high yields because they face relatively little competition for students.
Other colleges see their yield rates drop as their appeal rises and they become more competitive with higher-ranked institutions. Take Dickinson College, whose yield was 26 percent this year, much lower than some of its highly selective competitors. “We could have a higher yield if we competed against lower-tier institutions,” says Robert J. Massa, vice president for enrollment and college relations. “I would rather have a lower yield and compete against top-tier institutions.”

"In some circles, yield is entangled with measures of prestige. U.S. News & World Report once factored yield rates into its rankings of colleges, but it stopped doing so in 2004 amid the debate over the growth of early decision. The magazine now publishes a list of the “most popular colleges,” based solely on yield rates. In the most recent list, Harvard was first, followed by Brigham Young University and the University of Nebraska at Lincoln."

Unraveling

Many markets have trouble coordinating on the timing of transactions, and this has led to market failures in markets as diverse as the market for college football bowls, and the labor market for federal court clerks, and in various medical markets, such as (most recently) gastroenterologists and orthopaedic surgeons.

Why do transactions in some markets happen inefficiently early? Here are the concluding paragraphs from our recent NBER working paper Unraveling Results from Comparable Demand and Supply: An Experimental Investigation
by Muriel Niederle, Alvin E. Roth, M. Utku Unver - #15006 (LS)

" It has been known at least since Roth and Xing (1994) that many markets unravel, so that offers become progressively earlier as participants seek to make strategic use of the timing of transactions. It is clear that unraveling can have many causes, because markets are highly multidimensional and time is only one dimensional (and so transactions can only move in two directions in time, earlier or later). So there can be many different reasons that make it advantageous to make transactions earlier. There can also be strategic reasons to delay transactions; see e.g. Roth and Ockenfels (2002) on late bidding in internet auctions.
Thus the study of factors that promote unraveling is a large one, and a number of distinct causes have been identified in different markets or in theory, including instability of late outcomes (which gives blocking pairs an incentive to identify each other early), congestion of late markets (which makes it difficult to make transactions if they are left until too late), and the desire to mutually insure against late-resolving uncertainty. There has also been some study of market practices that may facilitate or impede the making of early offers, such as the rules and customs surrounding "exploding" offers, which expire if not accepted immediately.
In this paper we take a somewhat different tack, and consider conditions related to supply and demand that will tend to work against unraveling, or to facilitate it. There seems to be a widespread perception, in markets that have experienced it, that unraveling is sparked by a shortage of workers.
But for inefficient unraveling to occur, firms have to be willing to make early offers and workers have to be willing to accept them. Our experiment supports the hypothesis that a shortage of workers is not itself conducive to unraveling, since workers who know that they are in short supply need not hurry to accept offers by lower quality firms. Instead, in the model and in the experiment, it is comparable supply and demand that leads to unraveling, in which attention must be paid not only to the overall demand and supply, but to the supply and demand of workers and firms of the highest quality. This seems to reflect what we see in many unraveled markets, in which competition for the elite firms and workers is fierce, but the quality of workers may not be reliably revealed until after a good deal of hiring has already been completed."

http://papers.nber.org/papers/W15006

Postscript: Skip Sauer over at The Sports Economist has a post about a 9th grader offered a college football scholarship in what is becoming a seriously unraveled market.

Football bowls: market design by Congress?

Sports fans will no doubt be relieved to learn that the Feds are on the case: Congress examining fairness, financing of BCS system .

"Tackling an issue sure to rouse sports fans, lawmakers pressed college football officials Friday on switching the Bowl Championship Series to a playoff, with one Texas Republican calling the current system as unworkable as communism and joking it should be labeled "BS," not "BCS."
John Swofford, the coordinator of the BCS, rejected the idea of switching to a playoff, arguing it would threaten the existence of celebrated bowl games. Sponsorships and TV revenue that now go to bowl games would instead be spent on playoff games, "meaning that it will be very difficult for any bowl, including the current BCS bowls, which are among the oldest and most established in the game's history, to survive," Swofford said.
Rep. Joe Barton of Texas, who has introduced legislation that would prevent the NCAA from labeling a game a national championship unless it's the outcome of a playoff system, said that efforts to tinker with the BCS were bound to fail.
"It's like communism," he said at the House Energy and Commerce Committee's commerce, trade and consumer protection subcommittee hearing. "You can't fix it." "

While the BCS system is already a kind of camel (i.e. a horse designed by a committee), it is a considerable improvement over the unraveled market that came before it, in which bowl matchups were frequently mis-matches arranged several weeks before the end of the regular season, see
Frechette, Guillaume, Alvin E. Roth, and M. Utku Unver, "Unraveling Yields Inefficient Matchings: Evidence from Post-Season College Football Bowls," Rand Journal of Economics, 38, 4, Winter 2007, 967-982, with an online appendix).

I'm skeptical that Congress will push this very far, but it is good to know that the country is in such good shape that some of our Congress persons can devote their efforts to this.

HT: Utku Unver

Networks and high school athletes

While the NCAA regulates the communication between high school and college coaches, it has more trouble regulating third-party networkers, the NY Times reports: College Recruiting’s Thin Gray Line. It isn't entirely clear who is extracting information rents from whom, but one worries about the high school players.

"“Recruiting for college football is obviously changing,” Prince said in a telephone interview. “It’s become much more like the basketball model. When that happens, you then have people who are intermediaries ...”"

HT Muriel Niederle

College football and the BCS National Championship Game

Number 1 ranked Oklahoma will play number 2 ranked Florida Thursday evening in the Bowl Championship Series' National Championship Game, which this year will be played at the Orange Bowl. The championship game is the culmination of a sequence of "bowl" games that the BCS organizes, in which the most successful college teams each season play a final post-season game.

College football doesn't host playoffs. The "championship" game matches the two highest ranked teams at the end of the regular season, based on a more than usually uncertain ranking system (since some of the highly ranked teams will not have played each other). Sports Illustrated just published a story, before the championship game, saying that some of the early bowl games had low Nielsen ratings (which measure television viewership): Ratings are proof the addition of fifth BCS game officially a failure. The article notes
"By removing the top two teams from the existing BCS bowls (Rose, Fiesta, Sugar and Orange), the remaining lineup gets unavoidably watered-down. "

Utku Unver and Guillaume Frechette and I wrote a paper which showed that (under earlier versions of the BCS system) the championship games drew enough extra television viewers to make up for the lower viewership in other bowl games that (consequently) had neither the top nor second ranked team playing in them. (See also this interview about the origin of the BCS system (to which I devoted an earlier post).)

So, while the most exciting thing for some people Thursday evening will be the final score, I'll be waiting to hear the final Nielsen ratings.


(Our European colleagues are always bemused by the large role that college plays in the life of American football players, not to mention the role that football plays in the life of American colleges. While some professional sports have minor leagues or the equivalent, colleges serve that role for football. But that's a story for another time.)

10 PM update: here's a Washington Post story on the more than usual uncertainty in this year's rankings, which may lead to a lack of consensus that the winner of the championship game is the best college team. (The president elect for one is on record as thinking that a playoff system would be more rewarding...)

A word for unraveling in Singapore: "Choping"

"Choping" is Singapore English slang for reserving something well in advance, i.e. a place in school for your child, etc. That is, it is one of the actions involved in the unraveling of markets, the process by which transactions are arranged increasingly far in advance of when they will be carried out. Sometimes this has been a cause of market failures that lead to new market designs, with a prominent example being medical labor markets.

In some cases, the unraveling of a market has caused serious inefficiencies, as when college football bowl games used to be decided before the end of the regular season (which made it harder to arrange the kind of championship games that draw high television viewership), or when gastroenterologists used to be hired long before they finished their internal medicine residencies (which caused the national market to collapse into lots of regional markets). But, in most unraveled markets, data are lacking to directly determine if a particular set of market arrangments and timing are inefficient.

Tyler Cowen at MR has a (characteristically) very interesting post on choping at Singapore food courts, where patrons reserve seats by placing tissue papers on them, and then go to stand in line to get their food. He suggests (maybe just to be contrarian) that this is efficient. As one of the comments to his post points out, this would be the case in a model in which having to look for a seat once you have your food is incomparably more costly than any other outcome. Of course it is easy to see how (with different parameters) reserving seats in advance could be inefficient (although still an equilibrium). E.g. if it takes 15 minutes to get your food, and 15 minutes to eat it, then each chair could serve four people in an hour if people looked for a chair after getting their food, but only two people per hour if people reserve a chair before getting on line.

The discussion of all this in the Singapore press is satisfyingly nuanced. After a demonstration against choping by some students (Wiping out bad habit of 'choping' seats with tissue pack), the Straits Times has a story (Is this rude?) that explains both points of view.

On the one hand:
"But many people reckon there is nothing rude about reserving one's spot with a packet of tissue paper. Indeed, Mr Wong, who arrived in Singapore last month, said: 'It is a practical and creative way to reserve seats instead of standing around with a tray of food turning cold.' "

On the other:
"Tissue 'choping' seems to be uniquely Singaporean. Housewife Ivy Ong-Wood, in her late 30s, a Malaysian now living in Hong Kong, told LifeStyle: 'At the tea cafes or cha chan tengs in Hong Kong, people queue outside and are told where to sit. In Malaysia, there is no problem getting seats at the food centres.' "

Whatever the truth of the matter, this will not be an easy equilibrium to displace. The story notes: "It is so pervasive that companies even have tissue packs specially made with the word 'chope' for marketing purposes. "

Market for toilets: NYC marathon

Providing Toilets for 39,000 Runners

The NYC marathon is a peak load event:
"Gathering and placing 2,250 portable toilets for a one-day event — and then removing them almost immediately — is a daunting task. The marathon represents the third-largest annual assemblage of portable toilets in the country, behind the Rose Bowl college football game and parade and the motorcycle rally in Sturgis, S.D. Placed side by side, the 4-foot-wide toilets would stretch 1.7 miles. "

Apparently portable potties have a natural life cycle:
"The average special-event life of a portable toilet, Malone said, is two years — shorter if it attends a lot of concerts — before it is assigned to duty at construction sites, the “bread and butter” of the business. "