Another step in the unraveling of the baskeball market

In a further unraveling of the market for basketball players, Jeremy Tyler, 18, "became the first player to drop out of high school to play basketball professionally outside the United States." Here's an early story: High School Star to Play Professionally in Israel.

The deal with Macabee Haifa has since been finalized, and InsideHoops.com editor says: So instead of being surrounded by little kids on a HS basketball court, Tyler will make 140k and play with adults he can actually learn from. And then instead of being a college freshman a year later, he’ll probably do the same, perhaps for a bit more money. So he’ll have earned a quarter million dollars or so in two years before most players earn a penny (aside from the under the table stuff that just about every good young player gets). The thing is, I don’t think an overseas team is going to go out of their way to train him more than they would any other player, considering he’s only committed to be there for one year. Still, he should at least get way more out of being there for a year than he would as a HS senior."

And, it's not just basketball: here's a story from the Cleveland Plain Dealer on both Tyler and baseball star Bryce Harper: Teens turning pro? Their choice

"Baseball player Bryce Harper of Las Vegas and basketball player Jeremy Tyler of San Diego have found ways to manipulate their sports' entry-level restrictions and turn pro early, much the same way Bernie Kosar did in 1985 when he graduated two years early from Miami and entered a supplemental draft so the Browns could take him. "

Market for (seventh grade) basketball players

Got game in 7th grade? NCAA says you're a prospect

It looks like the NCAA plans to fight unraveling with unraveling:

"Giving in to the young-and-younger movement in college basketball recruiting, the NCAA has decreed that seventh-graders are now officially classified as prospects.
The organization voted Thursday to change the definition of a prospect from ninth grade to seventh grade — for men's basketball only — to nip a trend in which some college coaches were working at private, elite camps and clinics for seventh- and eighth-graders. The NCAA couldn't regulate those camps because those youngsters fell below the current cutoff."

HT Steve Leider

Costs of unraveling: elementary school basketball players

One of the costs of "unraveling," in which transactions come to be made increasingly early, is that matches are made on the basis of very noisy information. I've posted earlier about the competition by colleges for basketball players (Market for (seventh grade) basketball players ), and a recent story highlights just how noisy those early signals can be: First Impressions Can Create Unrealistic Expectations for Recruits .

"Amid the clamor to find the next basketball wunderkind, the evaluation of sixth graders remains an uncertain pursuit. Francis, who runs the Hoop Scoop recruiting service, said the process involved much guesswork.
The players can stop improving, stop caring or stop growing." (emphasis added: the source of uncertainty is different in different markets:)

"In January, the N.C.A.A.lowered the school year a basketball player was considered a prospect from ninth grade to seventh grade.
Though the change seemed curious, it closed a loophole that had allowed college coaches to gain a recruiting edge by inviting middle school players to private camps. Those middle school prospects are now protected by the N.C.A.A. the same way as high school recruits.
For now, elementary school students are not included in this new rule. An associate commissioner of the Big East, Joseph D’Antonio, the chairman of the N.C.A.A.’s legislative council, hopes there is no need to change that.
“I think the seventh- and eighth-grade endpoint is a place to begin, because that’s where the problem has been identified,” D’Antonio said. “Whether or not we see bylaws in the future that lower the age even further is going to be driven by what the coaching involvement is.”"

HT Muriel Niederle

Unraveling of pathology fellowships

A forthcoming paper in the journal Human Pathology gives a detailed account of the unraveling of the market for Pathology subspecialty fellowships, including the now familiar path towards earlier offers more diffuse in time, and to the increased hiring of internal candidates. It's an unusually thorough report that details some of the special pathologies of the Pathology labor market, and also compares it to the experience of other subspecialties such as Gastroenterology.

"Unlike the application process for first-year Pathology Residency, which is run through the National Resident MatchingProgram, applications for Subspecialty Pathology Fellowships are not coordinated by any consistent schedule. Competition for Subspecialty Pathology Fellowships has consistently resulted in undesirable drift of the fellowship application process to dates that are unacceptably early for many fellowship applicants. Responding to widespread dissatisfaction voiced by national pathology resident organizations, in 2007, the Association of Pathology Chairs began evaluation and potential intervention in the fellowship application process. Three years of intermittently intense discussion, surveys, and market analysis, have led the Council of the Association of Pathology Chairs to recommend implementation of a Pathology Subspecialty Fellowship Matching program starting in the 2011 to 2012 recruiting year, for those Applicants matriculating in fellowship programs July 2013. We report on the data that informed this decision and discuss the pros and cons that are so keenly felt by the stakeholders in this as-yet-incomplete reform process."

That's from the abstract of

"Pathology subspecialty fellowship application reform 2007 to 2010" by James M. Crawford MD, PhD,  Robert D. Hoffman MD, PhD, W. Stephen Black-Schaffer MD, in Human Pathology (2010)

Nice sentence about unraveling of college admissions

I'm not sure that I would give the same advice on college admissions that Frank Bruni gives to his niece in his Sunday NYT op-ed, but I admire this graceful sentence about the unraveling of that particular matching process:

"Last week was the deadline to apply to many colleges and universities, though the admissions dance — the dreaming, scheming, waiting and worrying — has really become a year-round, nonstop phenomenon, starting well before the final stretch of high school. Leslie’s a junior and has already visited half a dozen campuses, to see how they feel."

That's from How to Choose a College

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.

Coordinating the timing of the market for new Economics Ph.D.s: guidance from the AEA

 Here's an email broadcast by the American Economic Association, aimed to promote market thickness by avoiding unraveling and dealing with congestion:

AEA Guidance on Timeline for 2022-23 Economics Job Cycle

 July 1, 2022

To: Members of the American Economic Association
From: Peter L. Rousseau, Secretary-Treasurer
Subject: AEA Guidance on Timeline for 2022-23 Economics Job Cycle

The AEA Executive Committee, in conjunction with its Committee on the Job Market, recognizes that it is to the benefit of the profession if the job market for economists is thick, with many employers and job candidates participating in the same stages at the same time.  Moreover, the AEA's goals of diversity, equity, and inclusion are fostered by having a timeline that remains widely known and accepted, ensuring that candidates can correctly anticipate when each stage will occur. With these goals in mind, and in light of inquiries from both students and departments about how to proceed, the AEA asks that departments and other employers consider the following timeline for initial interviews and “flyouts” in the upcoming job cycle (2022-23).  

Interview invitations
The AEA suggests that employers wait to extend interview invitations until the day after job market signals are transmitted to employers.

Rationale: the AEA created the signaling mechanism to reduce the problem of asymmetric information and allow job candidates to credibly signal their interest to two employers. The AEA asks that employers wait to extend interview invitations until those signals have been transmitted, and to use that information to finalize their set of candidates to interview. This helps the job market in several ways: it reduces the problem of imperfect information, it helps ensure a thick market at each stage, and it promotes the AEA’s goals of diversity, equity, and inclusion. Job candidates from historically under-represented groups may lack informal networks and thus may especially rely on the signals to convey their interest. Waiting to review the signals before issuing invitations promotes a fairer, more equitable process.

We also ask that all employers indicate on EconTrack when they have extended interview invitations; this allows candidates to learn about the status of searches without visiting websites posting crowd-sourced information and potentially inappropriate other content.

Interviews
The AEA recommends that employers conduct initial interviews starting on Monday, January 2, 2023, and strongly recommends that all interviews take place virtually (e.g. by Zoom). We suggest that interviews not take place during the AEA meeting itself (January 6-8, 2023).

Rationale: In the past, interviews were conducted in person at the AEA/ASSA meetings. This promoted thickness of the market, because most candidates and employers were present at the in-person meetings, but had the disadvantage of precluding both job candidates and interviewers from fully participating in AEA/ASSA sessions. 

Interviews should now be conducted virtually to prevent risk of exposure to COVID, and to promote equity among the candidates. Informal feedback to the AEA committee on the job market indicated that the benefits of virtual first-round interviews (e.g. low monetary cost, zero cost in travel time, convenience) outweighed the limitations (e.g. less rich interaction).

We recommend that employers wait until January 2 to interview candidates because job candidates may have teaching or TA responsibilities in December. Moreover, having a clear start date for interviews will help candidates to have accurate expectations of the timing of the stages of the market. An unraveling of the market works against the AEA’s goal of having a thick market at each stage and also works against candidates having uniform expectations of the timing of each stage of the market.

We ask that interviews NOT take place during the AEA/ASSA meetings (January 6-8, 2023) in order to allow job candidates and interviewers to participate in the conference.

Flyouts and offers
Flyouts and offers have historically happened at times appropriate for the employer, and the AEA sees no reason to suggest otherwise.  We ask that all employers indicate on EconTrack when they have extended flyout invitations and closed their searches. Unlike with interviews, the AEA does not take a position on whether flyouts should be virtual or in-person.

Job market institutions and mechanisms
Please keep in mind the various job market institutions and mechanisms created by the AEA to improve the job market:

·       The JOE Network includes a database of job openings for economists.

o   Employers may sign up here: https://www.aeaweb.org/joe/employer.

o   Job candidates may search the database here: https://www.aeaweb.org/joe/listings.

o   The JOE Network has an electronic clearinghouse for job candidates to submit job applications. Job candidates may register here: https://www.aeaweb.org/joe/candidate.

·       The AEA Committee on the Job Market releases data and guidance on the job market here: https://www.aeaweb.org/joe/communications.

·       EconTrack: a board on which employers can indicate when they have extended interview and flyout invitations, and closed their search: https://www.aeaweb.org/econtrack.

Thank you for helping to ensure a transparent and equitable job market for new Ph.D. economists.  

2013 Best paper prize to Michael Ostrovsky and Michael Schwarz for AEJ: Micro, 2 (2), "Information Disclosure and Unraveling in Matching Markets,"

A Best Paper Prize for the matching market view of grade inflation:)

AEJ: Micro, 2 (2), "Information Disclosure and Unraveling in Matching Markets," Michael Ostrovsky and Michael Schwarz

Abstract

This paper explores information disclosure in matching markets. A school may suppress some information about students in order to improve their average job placement. We consider a setting with many schools, students, and jobs, and show that if early contracting is impossible, the same, "balanced" amount of information is disclosed in essentially all equilibria. When early contracting is allowed and information arrives gradually, if schools disclose the balanced amount of information, students and employers will not find it profitable to contract early. If they disclose more, some students and employers will prefer to sign contracts before all information is revealed. 

Unraveling and reneging in the summer internship market

 There are some costs to unraveling of offer dates, and some of them are borne by the companies that make very early offers. The WSJ has the story:

Summer Interns Jilt Companies as Better Offers Come Along. Some young professionals in training are job-hopping between internships before they even start, frustrating companies and campus career advisers.  By Lindsay Ellis

"Many college students are juggling multiple summer internship offers as companies try to lock in entry-level talent. So fierce is this year’s competition, recruiters and career advisers said, that some students are reneging on summer stints they accepted back in the fall as recruiters barrage them with interview requests and richer offers. Companies and colleges say reneging is still rare, but it is becoming more pervasive in the current recruiting frenzy.

...

"Some 15% of students who had accepted a 2022 internship offer in November said they were still “actively searching” for another offer, according to a survey of more than 100 students by research and analytics company Veris Insights.

"Corporate recruiters, including at Liberty Mutual Insurance Co. and General Mills Inc. , said more students are backing out of internship offers this year. Liberty Mutual said it is reviewing pay benchmarks. Other employers and campus career offices said some companies have boosted intern pay for certain in-demand students. Still more employers are stepping up contact with students between the time they accept offers and when they start jobs to keep them engaged.

...

"Students used to feel sheepish about backing out of offers, but Elizabeth Diley, campus talent acquisition leader at General Mills, said she has observed less remorse. The cereal and food maker usually hires about 150 interns each year; now it plans to over-hire, betting that some percentage of interns will renege on offers before their summer jobs start, she said.

"Companies typically recruit summer interns early in the academic year to lock in potential talent. The problem this year with commitments made months ago is that the hot job market is generating lots of new offers that can lure students away."

Further consequences of the unraveling of the market for law grads

The NY Times reports that some of the young lawyers who were made permanent offers after their second year summer associateships in August 2008 (for permanent jobs in 2009), only to have them rescinded or deferred, are finding satisfaction in public interest law.

Young Lawyers Turn to Public Service

"With offers of employment made in August 2008 and the full force of the recession hitting in October, many big law firms — like Latham & Watkins, where Mr. Richardson was a summer associate — had to re-evaluate the job offers made to members of the class of 2009. As a way to keep their costs down while holding on to promising associates, many offered the graduates the chance to take up to a year off before starting as associates, complete with a stipend of $60,000 to $75,000. They could travel, do research, or choose — as many did — to work in the public sector.

"With the deferral year ending, some of these newly minted lawyers are surprised to find themselves reconsidering their career goals and thinking about staying with public interest law. When Latham & Watkins asked Mr. Richardson to defer his start date until at least October 2010, he took his interest in environmental issues to Resources for the Future, a nonprofit policy group based in Washington, where he did legal research on the Deepwater Horizon oil spill and climate change.

"Now, despite heavy student-loan debt and a family to support, he has decided to say no to Latham and stay with public interest law, even though it pays far less.

“This is an amazing work environment,” said Mr. Richardson, who graduated from the University of Chicago Law School. “I’m working with a lot of really smart people and getting published. I’m not sure if there’s anywhere else I could do this, at least at this point in my career.”

"Mr. Richardson claims that everyone he knows has at least considered staying in public interest — and law school faculty members confirm that they are seeing a growing interest in that field."
...
"David Stern, executive director of Equal Justice Works, an organization devoted to getting new legal talent in the nonprofit and public sectors, notes that the pay gap between public interest and private firm work is steep. “The gap is multiples of the public interest salary, with a public interest attorney starting at, on average, $35,000 to $39,000 a year,” he said. “In a big law firm, these attorneys are starting at $140,000 to $150,000.”

"Someone who took a stipend from a law firm and then opted for public service law could also find themselves negotiating a payback plan for the stipend; policies differ from firm to firm on whether or how much of a stipend must be repaid."

Update: Steve Leider points me to this Atlantic column, pointing out that lawyers deferred from BigLaw jobs and being paid to do pro bono work are now volunteering at public interest organisations and displacing other lawyers who would have worked there...Money for Nothing

Here are some earlier posts about unraveling of the market for lawyers.

Unraveling in Belgian soccer: an under 2 year old signed to pro club's under 5 team

First, there is an "under 5 team." And that's the one that's unraveling.

20-MONTH-OLD BABY BECOMES WORLD’S YOUNGEST PRO FOOTBALLER
"Bryce Brites is only 20 months old and can’t even properly utter the words “ball” or “goal” but he just became the youngest professional football player on the planet.

This past week, Bryce signed with Belgian club FC Racing Boxberg, based near his home city of Genk, after impressing coaches with his “highly unusual” talent and “incredible” ball control. The precocious toddler was invited to train with the club’s Under-5 team and was signed and issued his very own Belgian FA membership card the very same day.

Amazingly, Bryce misses out on the all-time record for youngest-ever professional by two months. That record apparently belongs to Dutch footballer Baerke van der Meij, who signed a 10-year deal with VVV-Venlo when he was 18 months old."


HT: Juan Sebastián Pereyra Barreiro
***************

Update: videos here

Will curtailing early hiring/unraveling help diversity?

If you run a company that hires very early, you likely hire from familiar places.  If talented recruits from more diverse backgrounds are harder to identify very early, you might want to slow things down a bit.  Here's a WSJ story, about what might signal a change in the famously unraveled market for young analysts in private equity:


Blackstone to Bypass Scramble for Investment-Bank Talent in Bid to Diversify Hiring
On-campus recruiting will be expanded to 44 schools from nine in 2015
By Miriam Gottfried, June 24, 2020

"Blackstone Group Inc., ...one of the most coveted employers on Wall Street, is throwing out a key section of its recruiting playbook in a bid to improve its hiring process and increase diversity.

"The investing giant and its private-equity peers have long engaged in a yearly race to pluck junior investment bankers already trained in spreadsheet and PowerPoint wizardry from firms such as Goldman Sachs Group Inc. and Morgan Stanley. The prize for those lucky enough to make the jump: entry-level jobs that can pay as much as $300,000 a year at some firms.

"Now Blackstone officials say the firm plans to sit out that contest in favor of on-campus recruiting, already its main source of talent and one that it is expanding to bring in more candidates directly from schools, including historically black colleges and universities and women’s colleges. Blackstone, which has been working for years to extend its campus reach, says it will directly recruit from 44 schools this academic year. That is up from just nine in 2015.
...
"Blackstone, the largest buyout firm with $538 billion of assets, received nearly 15,000 applications for just 90 full-time analyst roles that started last year. It has two main sources of new junior talent: campuses and investment banks, which have their own hotly competitive entry-level hiring operations.

In the case of the latter, recruitment used to happen during the summer after applicants’ first year on the job, but it has steadily crept forward as private-equity firms jump the starting gun in hopes of securing the best candidates. In 2019, recruiting took place in September, just a couple months after candidates began working at banks—for roles that wouldn’t start until summer 2021."

***********
Here's an earlier related post (from long ago, before Covid-19 and George Floyd...):

Monday, December 9, 2019

Unraveling has made investment banks the farm teams of private equity...

Unraveling and exploding offers in the market for new private equity analysts

The unraveling in this market (which is also highly competitive in salaries) continues. That is, vigorous competition by the timing of (early, exploding) offers coexists with vigorous salary competition.  The NY Times Dealbook has the story.

Private Equity Firms in a Frenzied Race to Hire Young Investment Bankers
By WILLIAM ALDEN and SYDNEY EMBER  FEBRUARY 10, 2015

"Junior investment bankers who graduated from college only last year are being madly courted by private equity firms like Apollo Global Management, the Blackstone Group, Bain Capital and the Carlyle Group in a scramble that kicked off last weekend. 6.After back-to-back interviews, many are now fielding offers for jobs that won’t start until the summer of 2016.

"This process has become an annual rite by private equity firms, which raise money from investors (like pension funds) to buy entire companies. But it has grown more frenzied since the financial crisis, and it started this year weeks earlier than many in the industry had expected. Fearful of missing the best talent being developed at investment banks, the giants of private equity have turned Wall Street’s white-collar entry-level workers into a hot commodity.

“It’s as if these were star athletes,” said Adam Zoia, chief executive of the recruiting firm Glocap Search, who helps private equity firms hire young workers. “The irony is they are professionals six, seven months out of undergrad. It’s hard to imagine you can tell if someone’s a star or not.”
...
"Private equity’s recruiters, trying to secure the best workers for their clients, have helped accelerate the interview timeline, so that it is now the norm to interview workers about 18 months before their jobs will actually start. Some private equity executives say this means the candidates, who have barely encountered their first Wall Street deals, are performing more poorly in interviews.

Participants liken the situation to what is known in game theory as the “prisoner’s dilemma,” in which a lack of information causes private equity firms to act according to their own self-interest rather than find a solution that would be mutually beneficial to all parties. Last year, the process started in late February — weeks earlier than the cycle in 2013.

“There’s essentially always a handful of firms that are the catalysts, and that creates this huge domino effect across the industry,” said Morgan Halberg, a partner at the recruiting firm Dynamics Search Partners. “Every other firm essentially mobilizes and has to be reactive.”

"Many participants traced the beginning of this year’s process to a move by a midsize private equity firm in San Francisco. The firm, Golden Gate Capital, extended a handful of offers to young consulting firm employees on Thursday, according to people briefed on the matter who were not authorized to speak publicly.

"This alone was not enough for the rest of the industry to spring into action. Golden Gate, which has a close relationship with the consulting firm Bain & Company, was not drawing from the investment bank pool where the big private equity firms fish. What’s more, Golden Gate’s internal rationale was that it was responding to moves by other private equity firms to hire consultants. At first, rival private equity firms and their recruiters decided to stand down.

"But on Friday, an email circulated through the industry from a Boston-based private equity firm, Advent International, which said it would begin interviewing candidates from investment banks, people briefed on the matter said. The biggest firms knew they could not afford to wait. Recruiters contacted young bankers Friday night, instructing them to show up for interviews on Saturday and Sunday.

"That led to a weekend of sleepless nights and back-to-back interviews for the would-be hires. In a reflection of how early the cycle began, the Blackstone Group, which had started some interviews on Sunday, was in the middle of recruiting interns for this summer. Golden Gate, now feeling pressure from other firms, told at least one candidate to respond to a job offer by Sunday, shortening the deadline from this Wednesday.

"Many had expected this process to start in early March, or late February at the earliest. But by the beginning of this week, some of the biggest firms had already extended offers for the summer of 2016."

HT: Eric Budish

Market for lawyers: second year summer associates

Big law firms do a lot of the hiring of new lawyers by first hiring them as second year summer associates, who will work for the firm the summer between their second and third (last) year of law school, and who will often be recruited back to full time associate positions following graduation. At various times in the past this recruiting process has unraveled, with first year summer associateships sometimes assuming a similarly important role in the recruiting and screening process. (In general, unraveling is the process by which a market starts to arrange transactions, in this case employment, earlier and earlier before they will actually begin, and it can make the matching process inefficient.)


The Harvard Crimson reports what might be the beginning of some unraveling, as the recruiting process by which second year summer associates are recruited at Harvard will become about a month earlier, and before second year classes begin: HLS To Move Up Summer Job Hunt.

"Harvard Law School will move up its recruiting process in order to bring recruiters to campus earlier in the year after firm cutbacks due to last fall’s economic turbulence left many students with far fewer summer offers than in years past. The Law School’s Office of Career Services announced that the school will invite firms to campus the last full week of August before classes begin, advancing the recruiting timeline by about a month. Traditionally, the Law School’s recruiting cycle began later than at comparable institutions, which hurt students last October when law firms reduced the number of spots reserved for Harvard recruits in light the impending recession. Fly-out week—the time when students visit firms who have expressed interest in them—is now scheduled for the week of September 14, two weeks after the first day of classes. During that period, the school puts classes on hold for a week-long fall break. "

Timing of theater reviews

I have a longstanding interest in the timing of transactions (such as unraveling, when transactions become early, or sniping, when they become late, or congestion, when they take a long time, or deadlines). So I read with interest Catherine Rampell's piece on Theater Review Economics, about the timing of theater reviews. (Apparently she's a theater reviewer as well as an economics correspondent.  I guess I won't tell you what I do when not reviewing economics...)

It turns out that when she interviews show producers, one of the answers she gets concerns unraveling (although she discounts this possibility...).


"...as some of you may know, we have an odd little tradition in theater criticism, in that we (almost) never publish a review until after a production’s official opening night. I’ve long wondered about whether it makes good business sense for productions to enforce this embargo.

"While reviews run after opening night, they’re rarely based on a viewing of the actual opening night performance; the curtain generally falls much too late for critics to meet their deadlines for the next day’s paper. Instead, critics usually are invited to attend one of the preview performances after the show has already been “set” or “frozen” — that is, after the director and rest of the creative team have decided not to make any more major changes.

"The time between freezing and opening varies, but it’s generally somewhere from a couple of days to a week.

"I’ve been especially curious about review embargoes lately because summer theater productions usually have very short runs, and should theoretically want reviews published as early as possible — well before the show closes, anyway. Most of the shows I review during the rest of the year have pretty short runs, too, including some productions that last less than two weeks.

"I understand the desire to turn opening night into a big event to magnify press attention, as is done with the openings of big, star-studded movies and their sumptuous red carpets.

"But for a vast majority of theatrical events, little attention is paid to the opening-night parties and such. Even when publications do run photos of the pomp and circumstance of a play’s opening night — if Scarlett Johansson is starring in the show, say — that coverage usually appears in news articles and Us Weekly spreads, not critical reviews.

"Eager for the perspective of those who have money on the line, I called two longtime producers for their thoughts.

"The first was Roger Berlind, a phenomenally successful theater producer who has won 18 Tonys and mounted 80 Broadway shows since 1976, four of which are still running. (Another, “Annie,” opens in November.)

"He noted that when he began producing shows, critics attended on opening night and wrote a review for the late edition of the next day’s paper, since deadlines were often later then. He didn’t sound all too thrilled that the policy had changed.

"Today, he said, producers and press reps encourage the big critics to come a day or two before opening night, even though attending earlier is an option, because the show continues to improve up through the opening night even after the show is set. He said he worried that if critics were able to publish as soon as they saw the show, more of them would rush to see the production as early as possible because “critics are extremely competitive.” That rush would place pressure on the cast and creative team to polish the performances earlier. “Then you’d have to back up the entire process starting with the first day of rehearsal, and I don’t think that would be productive,” he said. “It’s expensive to go through the rehearsal process already.”
**************


I wonder whether the embargo on theater reviews might serve some of the same function that embargoes on news releases do...

Unraveling of law internships in Israel

I recently wrote about the Unraveling of law firm interviews of 2nd year students in the U.S.  It turns out that something similar is facing Israeli law students.

Assaf Romm, who just moved from Israel to Boston to study for a Ph.D. at Harvard writes:
"The Israeli market for law interns suffers from congestion. Recent ruling (first published today, see below) is that preliminary interviews could only be scheduled on third year of studies. I have many friends who were law students, and most of them signed a contract around their second year, where the interviews are scheduled around first year. Most of the interviews are conducted around the same period, and the firms are invited to the universities on certain date.

"Another interesting feature which isn't mentioned in the article is that there is also a very deep problem with the coordination between the interviews to public sector internships and private sector internships. Some (but only a very small number) of positions in the public sector are much more prestigious than any in the private section (specifically, the supreme court internships and the "Bagaz" department are considered best). Because of that, firms always make exploding offers before the public sector interviews even begin. A future-intern who decides to reject the firms' offers is usually making a high-stakes bet, because even the best cannot be sure they will get the good public internships, and if they don't get it they have to wait another year to start their internship in the private sector."

"The Hebrew article: http://www.ynet.co.il/articles/0,7340,L-3938299,00.html

"I couldn't find English translation. Here is Google translate (not a very good one, but understandable): http://translate.google.com/translate?js=y&prev=_t&hl=en&ie=UTF-8&layout=1&eotf=1&u=http://www.ynet.co.il/articles/0,7340,L-3938299,00.html&sl=auto&tl=en "

Update: apparently this is an issue of long standing, Itai Ashlagi sends this story from Haaretz in 2008. Law students to apply for internships only from third year :
Israel Bar Association's council approved the rules governing job offers for internships, though they still require the justice minister's approval.

"In recent years, law students have started arranging a place for doing their articles as soon as they start their studies, said attorney Orrin Persky, the head of the Bar Association's committee on internships. He explained that this pressure emanated from both the students and the law firms and has created a market failure for finding such posts.


"In addition, there are a large number of complaints about students canceling their internship positions, which they had agreed to a year or two earlier.

"The new rules would require firms and all other bodies providing internships, such as the State Attorney's Office, to start interviewing no earlier than March 15 of the student's third year for the internship that will start in the following calendar year. "

Federico Echenique and Juan Pereyra on unraveling of matching markets

 Strategic complementarities and unravelingin matching markets 
by Federico Echenique  and  Juan Sebastián Pereyra, Theoretical Economics 11 (2016), 1–39

 Abstract: We present a theoretical explanation of inefficient early matching in matching markets. Our explanation is based on strategic complementarities and strategic unraveling. We identify a negative externality imposed on the rest of the market by agents who make early offers. As a consequence, an agent may make an early offer because she is concerned that others are making early offers. Yet other agents make early offers because they are concerned that others worry about early offers, and so on and so forth. The end result is that any given agent is more likely to make an early offer than a late offer.

Unraveling of appellate court clerkships (only more so)

Steve Leider writes:

"I know you keep an eye on the unraveling of judicial hiring.  Listening to a podcast about the supreme court they gave an example of even more extreme advance hiring.  At about 51:30 minutes into this podcast (recorded at Michigan, ...) they talk about an Appeal's Court judge (Judge Katzmann, 2nd Circuit) currently hiring for the 2024 term.

https://strict-scrutiny.simplecast.com/episodes/standing-cheese 

 As one of the hosts noted - "A law student could get married, give birth, and have a baby - and the baby would be in pre-K before the clerkship even starts."

NRMP Position Statement On The (In)Feasibility Of An Early Match

 There has been some suggestion that dividing the resident match into early and late matches might be a way to address the congestion in applications and interviews that has bedeviled the transition from medical school to residency in recent years.  The NRMP now has a statement pointing out that there are serious problems with that idea.

NRMP Position Statement On The Feasibility Of An Early Match

"For the past eighteen months the National Resident Matching Program® (NRMP®) has been working closely with other national medical education organizations to examine the current state of the transition to residency. Conversations have focused on mitigating burdens for both applicants and programs in the selection and recruitment process and addressing uncertainty in the future of the interview cycle.

...

"Among the proposed solutions to current challenges in the transition to residency are calls for an early match. Specifically, NRMP has been asked to implement the Early Result and Acceptance Program (ERAP) pilot program proposed for Obstetrics and Gynecology, created through American Medical Association’s Reimagining Residency Grant, “Transforming the UME to GME Transition: Right Resident, Right Program, Ready Day One”. The stated goals of the ERAP pilot are to allow applicants to engage in strategic decision-making, reduce burden on programs while hypothesizing that the change will result in holistic review, and reduce necessary applications and interviews. ERAP calls for an early match to begin in September 2022 for the 2023 Match cycle. ERAP permits applicants to apply to a maximum of three programs in the early match with programs including up to 50% of their positions if they choose to participate. This statement outlines NRMP’s concerns about the structure of the ERAP pilot program, the lack of evidence supporting the proposed changes to the Match, the implications of an early match for the matching process, and preliminary findings of modeling an early match being conducted by experts in market design and the matching algorithm.

"The NRMP has reviewed the ERAP pilot program with consideration for whether changes to the matching process have the potential to inadvertently disadvantage Match participants. It is through that lens NRMP remains concerned with the following aspects of the ERAP pilot:

"Although voluntary, applicants may feel pressured to participate in an early match where up to half the available positions in a specialty may fill before the Main Residency Match® opens.

"There exists no mechanism for demonstrating how an early match will make visible less competitive applicants and those underrepresented in medicine, which is hypothesized in the project document.

"The proposed limit of three applications per applicant could force applicants to make compromises not present in the Match today. ...While the ERAP investigation team hypothesized that the application limit will increase holistic review by programs, there are no mandates to ensure that programs conduct holistic review nor are there restrictions on the number of applications programs may accept, interviews they may offer, or applicants they may rank. With no objective evidence to support the hypothesis, we cannot conclude that the proposed application limit would increase holistic review of applications.

"There exists no mechanism for safeguarding an applicant’s failure to match in the early match from programs as they enter the Main Residency Match, which could result in the applicant being viewed as less competitive.

"In addition to concerns about disadvantaging applicants, NRMP is mindful of possible behavior changes resulting from changes to the Match process that could affect Match outcomes for all Match participants.

• "The structure of an early match does not allow for mixed-specialty couples ranking or multispecialty individual ranking, which may cause applicants to reconsider their specialty choices, fundamentally changing their career path.
• "Programs may have insufficient information (e.g., clinical evaluations, MSPE, LORs) to evaluate applicants fully and fairly in the early match.
• Programs may see a surge in non-traditional applicants as the early match provides three opportunities to enter training through either the early match, the Main Residency Match, or SOAP®. This may result in an increased number of applications or applicants who may otherwise not select the specialty.
• Not matching in the early match is likely to increase the number of applications per individual in the Main Residency Match, as applicants enter a matching cycle with only half of the positions remaining available. This may increase stress, cost, and could adversely affect the wellness of applicants.

...

"it is important to first outline the core concepts of the match as a stable “market”. The Match was established in 1952, to solve a “congestion” problem in medical residencies involving applications, offers, and acceptances. In a May 2021 pre-submission working paper, Itai Ashlagi, Ph.D. and Alvin Roth, Ph.D. describe the consequences of congestion as “unraveling” where programs initially responded to congestion by making “exploding offers” that prevented applicants from considering many programs because they were pressed to accept an early offer, before knowing whether an offer from a more preferred program might be forthcoming if they waited. The authors note that NRMP’s matching process, in its current form, has four distinct properties that are relevant to managing the problems of congestion and unraveling and maintaining a stable matching market. Specifically, the NRMP matching process

"1. Is Uncongested: participants make all decisions (on Rank Order Lists) in advance, so there is no delay in processing offers, rejections, and acceptances, which is done by the computerized Roth-Peranson algorithm.

"2. Defers acceptances: preferences of applicants and programs are not finalized until all preferences have been considered, thereby producing stable matching: i.e., matching in which there are no “blocking pairs” of applicants and programs not matched to one another but who both would prefer to be.

"3. Promotes true preferences: it is safe for participants to state their true preferences when they submit their Rank Order Lists (ROLs).

"4. Establishes a “thick” market: most residency programs in most specialties participate in the NRMP Match, which also allows for multi-specialty applications and couple matching (including for mixed-specialty couples).

"The authors opine that an early match such as the proposed ERAP pilot followed by the Main Residency Match would not share three of the four important properties of the Match:

"1. An early match would dilute the thick market: not all positions would be available at the same time (and further, it would not allow applicants to express multi-specialty preferences, nor would it accommodate mixed-specialty couples).

"2. early match would introduce complicated strategic decisions into the formulation of ROLs: it would no longer be safe for participants to submit ROLs straightforwardly corresponding to their preferences.

"3. An early match would not produce a stable matching: there would be mutually disappointed blocking pairs of mismatched applicants and programs. This would also make it less safe to report ROLs that straightforwardly corresponded to preferences."

Market design at Harvard Business School

Here's the announcement of a new HBS course on market design:

Making Markets

Course Number 1764

Professor Thomas R. Eisenmann
Associate Professor Scott Duke Kominers
Spring; Q3Q4; 3 credits
24 sessions
Paper

Markets are everywhere - and where they’re not, you can build them!

Career Focus

Over the past twenty years, entrepreneurs have created and captured enormous value by launching new marketplaces. Examples include Airbnb, Alibaba, ClassPass, Craigslist, eBay, eHarmony, Etsy, Gerson Lehrman Group, Google, IEX Group, Lending Club, Kickstarter, OpenTable, Rakuten, Uber, Upwork, and many more.

Making Markets (M²) is intended for students who want to manage in marketplace environments and remedy market failures by building new platforms and marketplaces from scratch or by redesigning existing ones - or who want to advise or invest in entrepreneurs who pursue such opportunities.

Educational Objectives

Students will learn how to identify market failures and determine when those failures create opportunities to launch or redesign marketplaces.

First, we will explore how markets function and what makes them fail. Next, we will examine how effective marketplace design-or redesign-can address market failures and improve efficiency, liquidity, and fairness. Then, we will take the entrepreneur’s perspective, studying the key barriers to organizing new marketplaces and devising strategies for overcoming them. Along the way, we will pay special attention to settings in which marketplaces create more value for transaction partners than relying only on unmediated exchanges. As we will see, marketplace design can often “square the circle,” solving seemingly intractable problems simply by reducing transaction costs or barriers to entry.

Case contexts will range from ultra-local (e.g., the HBS EC course lottery) to truly global (e.g., container shipping); will examine private and public/social enterprise settings; will profile both online and offline marketplaces; and will span all stages of marketplace launch and development.

Course Content

Through case studies, simulations, and the occasional interactive lecture, M² will examine the design, launch, and management of marketplaces and marketplace platforms. Core lessons include:

• The Structure and Purposes of Markets: Markets create value by enabling parties to execute mutually beneficial transactions - exchanging goods, say, or sharing ideas. They are everywhere that transacting parties face incentives - from classic contexts like financial or product markets to dating, recruiting, and the sharing economy.
  Some markets are completely unstructured, but most are subject to at least some rules that shape participation. In this course, we will focus in particular on markets that are organized through marketplaces that combine rules for participation with infrastructure to facilitate interactions and transactions.
• Common Sources of Market Failure: In many markets, institutional frictions combine with incentives to produce suboptimal outcomes - socially wasteful transactions occur, or productive ones do not. When such market failures occur, entrepreneurial opportunities arise: reshaping the market to improve efficiency creates value that can be captured(!).
  To understand how to fix markets, however, we must first understand how and why market failures occur. The course will classify different types of market failures, and highlight entrepreneurial responses to each.
• Strategies for Launching and Managing Marketplaces: When launching a marketplace or other market intervention, it is essential to mobilize a critical mass of market participants so that there is enough liquidity for valuable transactions to occur. Once running, a marketplace must maintain balance between its supply and demand sides, or else participants may leave to transact elsewhere. Yet at the same time, marketplaces must avoid crowding that makes it hard for participants to find high-value transaction partners.
  The course will provide strategies for promoting participation and trust in marketplaces, especially early on. Then, we will learn techniques for growing marketplaces, and combating the problems that marketplaces face at scale, such as congestion, “unraveling” (e.g., when recruiters pressure candidates with early and exploding offers), and the risk of disintermediation.
• Types of Marketplace Mechanisms: Markets work in many different ways. Some compel participants to seek out their own transaction partners; others use centralized transaction discovery and execution systems like auctions and recommendation algorithms. The mechanisms that a marketplace uses to identify and process transactions can be the difference between success and failure.
  Choosing among marketplace mechanisms requires careful attention to market participants’ needs and transaction attributes. The course will provide guidelines for adopting mechanisms best suited for different market contexts.