Research Design Meets Market Design: Using Centralized Assignment for Impact Evaluation
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Dual-Donor Organ Exchange
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I'll post market design related news and items about repugnant markets.See also my Game theory, experimental economics, and market design page. I have a general-interest book on market design: Who Gets What--and Why The subtitle is "The new economics of matchmaking and market design."
Market design is evolving, and new ways of organizing it are being explored.
In my post yesterday, I talked about the early work on school choice that Atila Abdulkadiroglu, Parag Pathak, Tayfun Sonmez and I did under the auspices of Boston schools Superintendent Tom Payzant. The market design by economists in Boston, as with the earlier successful effort in New York City, was conducted as part of our research work as professors. Not a penny changed hands, and we all felt good about that.
But if there was a flaw in that working arrangement, it was that no contracts were signed, and so as staff turnover took place in school districts, and the individuals we had dealt with departed, the district's institutional memory eroded, and they didn't always remember to turn to us when difficulties arose that we could have helped them with. Partly to address that, and to have at least one person able to devote time to approaching school districts, Parag and Atila and I supported Neil Dorosin in founding the non-profit Institute for Innovation in Public School Choice, which during its lifetime helped school choice in a number of American cities, including Denver, New Orleans, and Washington D.C.
Parag and Atila went on to be founding members of MIT's School Effectiveness and Inequality Intiative, which just this week was "relaunched" with a different team as MIT Blueprint Labs, which aims to build on MIT's strengths not just in school choice but in a much wider area of market design and policy analysis, and to be a lab with a large staff and extensive fundraising:
Launch announcement of MIT Blueprint Labs
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Update: and here's the Blueprint Labs new (announced Aug. 11) website: https://blueprintlabs.mit.edu/
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In a related development, Parag has cofounded a new for-profit Ed-tech startup called Avela, that plans to spread the technologies he's helped pioneer. A for-profit firm has some funding, employment and investing opportunities that aren't available to non-profits or university labs, let alone to teams of professors organized informally. And as in the Blueprint Lab, they hope that the tools they will develop will be readily applicable to quite a broad range of matching markets and market designs.
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"We use digital technology and social science research to improve the effectiveness of leading social sector organizations.
"Based out of Stanford GSB, the lab is a research initiative of affiliated academics and staff, as well as researchers and students, who are passionate about conducting research that guides and improves the process of innovation.
We collaborate with a wide range of organizations, from large firms to smaller startups, for-profits to nonprofits, and NGOs to governments, to conduct research. Then, we apply and disseminate our insights to achieve social impact at large scale."
Here's a paper that caught my eye in the current issue of Theoretical Economics, Volume 18, Issue 3 (July 2023)
Incentives in matching markets: Counting and comparing manipulating agents by Somouaoga Bonkoungou and Alexander Nesterov
Abstract: Manipulability is a threat to the successful design of centralized matching markets. However, in many applications some manipulation is inevitable and the designer wants to compare manipulable mechanisms to select the best among them. We count the number of agents with an incentive to manipulate and rank mechanisms by their level of manipulability. This ranking sheds a new light on practical design decisions such as the design of the entry-level medical labor market in the United States, and school admissions systems in New York, Chicago, Denver, and many cities in Ghana and the United Kingdom.
"First, we consider the college admissions problem where both students and schools are strategic agents (Gale and Shapley (1962)) and schools can misreport their preferences as well as their capacities. We show that when all manipulations (by students as well as by schools) are considered, the student-proposing Gale–Shapley (GS) mechanism has the smallest number of manipulating agents among all stable matching mechanisms (Theorem 1). Dubins and Freedman (1981) and Roth (1982) show that this mechanism is not manipulable by students. This result was one of the main arguments in favor of its choice for the NRMP. However, it also has the largest number of manipulating schools among all stable mechanisms (Pathak and Sönmez (2013)). Our result still supports its choice when all strategic agents are considered. What is more, it is still the best choice even when schools can only misreport their capacities, but not their preferences. All these conclusions carry over to the general model where, in addition, students face ranking constraints: although the student-proposing GS mechanism is now manipulable by students, it is still the least manipulable mechanism.
"Second, we consider the school choice problem (Abdulkadiroglu and Sönmez ˘ (2003)) where students are the only strategic agents and also face ranking constraints. Historically, many school choice systems have used the constrained immediate acceptance (Boston) mechanism, but over time shifted toward the constrained student proposing GS mechanisms and relaxing the constraint. We demonstrate that the number of manipulating students (Theorem 2) weakly decreased as a result of these changes."