Housemate match

A matching service run by the Atlanta JCC: Housemate Match

"Housemate Match (HMM) is a unique, nationally recognized, home sharing program that matches mature adult homeowners who have extra room in their homes with adults (tenants) seeking a roommate in a beautiful and safe place to live in the Atlanta area.
HMM provides rooms to rent for those who prefer to share a home rather than living alone and for those who choose to remain in their home and age in place.
International friends are welcome. "

Pawn shops--high interest loans for the credit challenged

The Telegraph reports on the credit crisis in England: Financial crisis: hard-up consumers are selling jewellery for cash

Pawnbrokers make loans with goods as collateral, and mostly items are redeemed.

"Pawnbrokers are distinct from high street buy-back shops such as Cash Converters, where a customer will sell an item with the option to buy it back 28 days later. If the customer doesn't repurchase the item, it goes into the shop to be sold (items are not usually limited to gold and jewellery; they can be electrical goods, for example).
Pawnbrokers are regulated alongside banks and other lenders by the Consumer Credit Act 1974. Borrowing through a pawnbroker may not be suitable for everyone and high interest rates mean it is not a long-term solution, as they themselves acknowledge, but sometimes it can resolve short-term cash flow problems. "

Congestion in the supply chain for new doctors

A new doctor needs not only a place in medical school, but also some clinical rotations in hospitals while still a medical student, and a residency position after graduation. New medical schools, and medical schools that wish to increase their class size, need to find these for their students, which is one of the constraints on increasing the size of US medical school output. The Chronicle of Higher Education describes the situation in Arizona: Shortage of Training Slots Threatens to Stall Influx of New Doctors. (An ungated version will be available for five days at http://chronicle.com/temp/email2.php?id=hVntG8hqVPcppSXRz6qmdkfdQtSZNB5V )

Britain votes to allow human-animal hybrids

On the repugnant transaction front, the Telegraph reports that after considerable debate, MPs vote to allow human-animal hybrids

"Following a landmark Commons vote, Britain will become one of a handful of countries in the world to encourage ground-breaking research by implanting human cells into an egg taken from an animal, usually a rabbit.
Pro-life MPs warned that the step could lead to the creation of half-human, half-ape "humanzees" or "minotaurs" - a claim denied by the Department of Health.
Hybrids - called "admixed embryos" by the scientific community - are banned in at least 21 countries, but scientists believe that they could be used to find cures for dozens of serious conditions, from heart disease to dementia.
MPs voted overwhelmingly in favour of the Human Fertilisation and Embryology Bill after being told that it could revolutionise the lives of hundreds of thousands of people, bringing to a close one of the most bitter Parliamentary wrangles of recent years. "

Emergency Economic Stabilization Act of 2008 --market mechanisms

The bailout bill is pretty terse on the details of market design: here's the relevant section of H.R.1424, part b,SEC. 113. MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS

"(b) Use of Market Mechanisms- In making purchases under this Act , the Secretary shall--
(1) make such purchases at the lowest price that the Secretary determines to be consistent with the purposes of this Act ; and
(2) maximize the efficiency of the use of taxpayer resources by using market mechanisms, including auctions or reverse auctions, where appropriate.
(c) Direct Purchases- If the Secretary determines that use of a market mechanism under subsection (b) is not feasible or appropriate, and the purposes of the Act are best met through direct purchases from an individual financial institution, the Secretary shall pursue additional measures to ensure that prices paid for assets are reasonable and reflect the underlying value of the asset."

HT to Guhan Subramanian

Market for books in translation

The Frankfurt book fair sounds like it's a lot of fun for publishing professionals, but it also sounds like the market for books to translate hasn't been changed much by technology: Wheeling and Dealing and Finding Books to Translate Into Dutch. Much of the information seems to be passed between people who know each other.

Market for Ivory

Ebay to Ban Sales of Ivory Products in January

There are lots of reasons that transactions can become repugnant: "EBay is banning the sale of ivory products to help protect African and Asian elephants."

''EBay's decision to wash its hands of the uncontrollable, bloody ivory trade is commendable and should set an example for others,'' said Teresa Telecky, policy director for Humane Society International.

Academic job market during a recession

The Chronicle of Higher Ed informally surveys supply and demand across academic disciplines: Job Market: Optimism, Tempered by Worries--Prospects for Ph.D.'s in some fields are decent, despite economic woes
(ungated version here for five days: http://chronicle.com/temp/email2.php?id=28qCgnMR5vznkhvXJdjPyXrMks4NssKk)

In a recession following a stock market decline, more professors may delay retirement, state universities may freeze hiring, non-academic hiring may slow down, all of which could potentially affect academic hiring, both by changing demand and by changing the nature of demand (e.g. changing the mix of tenure track versus other positions).

Market for drugs in Naples

The Times of London writes of the drug market in Naples, where market norms are breaking down.

Apparently the proverbial honor among thieves has its limits:
"The viciousness appalled even high-ranking crime bosses. Targeting innocent relatives of clan members is supposedly against the unwritten rules of Italy’s mafias. The Camorra syndicates of the area, however, had little time for niceties when they saw their status as rulers of Europe’s single biggest drugs market threatened. "

One of the bosses reflects "“There is a big difference between now and then, between my generation and the one coming of age now,” he says, drawing heavily on a cigarette. “There is too much money at stake. As a result there are no more values, no more rules or principles. Before, people kept their word and answered for their actions. We called them men of consequence. But now everyone wants to become a boss. Any young punk wants to have power, wants to be someone. They make a mess of things and don’t want to carry responsibility. "

Black market in poverty--fraudulent ration cards

The Hindu reports: Hi-tech foodgrains rationing system introduced for below poverty line families

"Bangalore: The State Government has introduced a hi-tech rationing system which will ensure the timely supply of foodgrains to people living below the poverty line and simultaneously prevent black-marketing and circulation of bogus ration cards. ...
"Governments in the State over the past three decades have found it difficult to check the rampant black-marketing in foodgrains and circulation of bogus ration cards, although it is evident that politicians have been behind the large-scale issue of below poverty line cards in exchange for votes. "

Assisted suicide in England, continued

The recent case of an Englishman whose family travelled with him to Switzerland to end his life has led to renewed debate on English laws against assisted suicide. The Telegraph quotes the British philosopher Mary (Baroness) Warnock:
""We have a moral obligation to other people to take their seriously reached decisions with regard to their own lives equally seriously," she said.
Her comments came after Mr James' parents were questioned by West Mercia Police after travelling with him to Switzerland. "

The spot market for manual labor

Market for Day Laborers Sours With the Economy

"As the economy has worsened, the number of laborers gathering at the Home Depot here has grown, making the competition for fewer jobs that much fiercer. The newcomers have arrived from other cities, thinking things would be better in New York. Or they have been laid off from semipermanent jobs in manufacturing and construction, either as a result of the economy or tougher crackdowns on illegal immigrants. "

Incremental changes

It is often easier to make incremental changes in a marketplace, rather than big ones all at once. The NY Times has a story on Yahoo's painstaking process of changing its home page, a process apparently common to big web portals: Changing That Home Page? Take Baby Steps.

"You could call it stealth innovation. The company’s goal is to end up several months from now with a completely different, and presumably better, front page — with its audience intact. The effort is as much art as science and seeks to balance the company’s desire to innovate with its fear of alienating users. And it offers an example of how online services are designed and improved in a world where a rival’s offering is just a click away.
The challenges are not unique to Yahoo. All kinds of Web sites, big and small, face similar issues as they leap from version 1.0 to version 2.0 and beyond. But the largest, most successful sites have the most to lose by springing sudden changes on their users, so they often exercise particular caution. Google, for instance, has said it tries to make changes to its search engine that, on their own, are imperceptible, but that taken together result in a better product over time. With the same goal in mind, eBay once took 30 days to gradually change the background color of its home page from gray to white. "

Financial Fraud, and law enforcement

Some parts of market design involve criminal law, and these depend for their effectiveness on law enforcement. The NY Times reports that the
F.B.I. Struggles to Handle Wave of Financial Fraud Cases

"The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime...
"So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars."

Incentives in (British) medicine, continued

Doctors paid thousands not to send patients to hospital for treatment

The Telegraph reports "Family doctors are being paid thousands of pounds not to send their patients to hospital for specialist treatment, sparking fears over standards of care.
...Dozens of incentive schemes have been uncovered which allow GPs to profit by slashing the number of patients they refer for hospital care.
Under one scheme, GPs stand to gain £59 for every patient not referred to hospital, if they cut an average referral rate by between two and eight per cent. "

Recall my earlier post on a different but related issue.

More on Darkmarket, the Craigslist of Crime

It was always the case that if you wanted to strike up a conversation with an undercover policeman, you could walk into a bar and whisper that you were looking to hire a hitman. It turns out that this is true in cyberspace as well: Cybercrime Supersite 'DarkMarket' Was FBI Sting, Documents Confirm

"Like earlier crime sites, DarkMarket allowed buyers and sellers of stolen identities and credit card data to meet and do business in an entrepreneurial, peer-reviewed environment. Products for sale ran the gamut from specialized hardware, to electronic banking logins collected from phishing attacks, stolen personal data needed to assume a consumer's identity ("full infos") and credit card magstripe swipes ("dumps), which are used to produce counterfeit cards. Vendors were encouraged to submit their goods for review before offering them for sale.
...the FBI used DarkMarket to build "intelligence briefs" on its members, complete with their internet IP addresses and details of their activities on the site. In at least some cases, the bureau matched the information with transaction records provided by the electronic currency service E-Gold."

In any event, the FBI went out in character. You can read the final closedown message here: 56 Arrested in DarkMarket Sting, Says FBI

HT to Steve Leider (who is on the market this year)

DarkMarket

The London Times reports: Online crime marketplace DarkMarket closed following UK police raids

"DarkMarket was used to swap information about fraud techniques and to sell credit card details. In December, The Times revealed that websites such as DarkMarket were selling financial details of tens of thousands of Britons for less than £1. "

Assisted suicide: Switzerland and England

The London Times reports that prosecutors are looking into the case of a British citizen whose family helped him travel to a Swiss clinic to die: 'Second-class life' not enough for injured rugby star Daniel James

"More than 100 Britons are claimed to have travelled to Swiss clinic where Daniel died to make use of laws that allow assisted suicide. Most are in the final stages of a terminal illness.
Although assisted suicide is illegal in Britain and carries a sentence of up to 14 years in jail no one has been prosecuted for taking someone to Dignitas. The figure on assisted dying, was released by the clinic at the start of a High Court test challenge to the laws that ban aiding and abetting suicide. "

Black market for body parts

Former UCLA Exec Pleads Guilty to Body Trafficking

"The former chief of UCLA's cadaver program pleaded guilty Friday for his role in selling donated body parts to medical, drug and research companies in a scheme that netted up to $1 million, prosecutors said.
Henry Reid, 58, pleaded guilty in Los Angeles County Superior Court to one count of conspiracy to commit grand theft, with a special allegation that he damaged or destroyed more than $1 million worth of school property, which refers to the donated bodies."

New survey of matching by Sonmez and Unver

Allocation and Exchange of Discrete Resources: Matching Market Design for House Allocation, Kidney Exchange, and School Choice by Tayfun Sonmez and Utku Unver, forthcoming in the Handbook of Social Economics edited by Jess Benhabib, Alberto Bisin, and Matthew Jackson.

Arrow in the Guardian on the financial crisis

Economists are accustomed to think of markets as being public goods, but Ken Arrow writes that they may have negative externalities if they increase asymmetric information, and generally make reliable understanding harder to come by:

"the root is this conflict between the genuine social value of increased variety and spread of risk-bearing securities and the limits imposed by the growing difficulty of understanding the underlying risks imposed by growing complexity."

Experiments in market design: financial bailout

NPR has followed up their earlier coverage of the Ausubel-Cramton reverse auction proposal with a brief story reporting on some experiments they are running with it: Can the Banks Cheat?

Hat tip to Steve Leider (an innovative experimenter and behavioral economist on the market this year:)

Market design that you can't refuse: Treasury switches to equity

The NY Times reports that the latest change of direction in the financial bailout was presented as an ultimatum by the Treasury to big banks: Drama Behind a $250 Billion Banking Deal

Peer to peer lending in the credit crunch

Alan Krueger, writing in the NY Times blog, notes that even borrowers with good credit are being moved by circumstance to some of the peer to peer lenders: In Credit Crisis, Some Turn to Online Peers for Cash

Congestion fees: "Lexus lanes" considered in UK

The Telegraph reports that British traffic authorities are considering allowing motorists driving alone to pay to be allowed to drive in less crowded lanes previously reserved for high occupancy vehicles: 'Lexus lanes' could be trialled within two years .

The automobile association finds this repugnant:

"The plans were condemned by the AA.
"Our members oppose them, they don't want to pay to use hot lanes," a spokesman said. "Why should people have to fork out to avoid congestion?" "

Tipping--in restaurants

The NY Times reports on the history of how that aristocratic European institution became an American custom: Why Tip?
It was once widely regarded as a repugnant transaction:
"Ultimately, even those who in principle opposed the practice found themselves unable to stiff their servers. Samuel Gompers, who was president of the American Federation of Labor and a leading figure of the anti-tipping movement, admitted that he “followed the usual custom of giving tips.” "
Ben Franklin worried about it: "“To overtip is to appear an ass: to undertip is to appear an even greater ass,” Benjamin Franklin reportedly noted during his stint in Paris, and his quandary continues to vex American diners."

But eventually the custom caught on in America even as it waned it Europe.

Kol Nidre: Contract law when your counterparty is omnipotent

Michael Weiss recounts in Slate how the Kol Nidre prayer , has changed over time.

Happy Hour

This story, from the Times of London, seems to combine at least two themes commonly encountered in legislation limiting repugnant transactions: Ministers to ban free drinks for women

Consumer goods in Gaza

Ynet reports on the tunnel economy.

E-retailing

The NY Times reviews some of the history of eBay and Amazon: Amid the Gloom, an E-Commerce War

Marriage Market--gay marriage legalized in CT

Conn. High Court Rules Gay Couples Can Marry

We are witnessing a transaction widely regarded as repugnant since Biblical antiquity being reassessed in light of modern ideas about equal protection under the law.

Market for economic advice (market failure)

This morning Peter Cramton and Larry Ausubel were on NPR talking about their reverse auction proposal, and The Chronicle of Higher Education writes about how little advice Congress got from economists on the financial rescue plans (i.e. not only how but what to buy, etc):
In Dismal Times, Economists Try to Shape Financial Debates (a permanent link for subscribers here)

Some quotes:
"Legislation drafted in haste and negotiated with recalcitrant partners is going to be bad legislation"

"Despite his frustrations with Congress, Mr. Galbraith says that he learned from watching his father for many years that it is important never to condescend to policy makers. “These are serious people, and you need to speak to them in a candid and serious way,” he says. “The question is not so much what economists need to say to policy makers, but what kind of policy education economists need in order to be able to intelligently understand the constraints that policy makers operate under.”
But one of the professors who joined Mr. Zingales in writing the anti-bailout petition takes a dimmer view of economists' efforts to speak directly into lawmakers' ears.
“The business of advice remains what it was,” says John H. Cochrane, a professor of finance at the University of Chicago. “You have to be willing become a sort of media person. You have to tailor your advice to what people want to hear, and then shade it a bit in the direction of common sense.” "

Online advertising--Ben Edelman

Securing Online Advertising: Rustlers and Sheriffs in the New Wild West

There's a lot of fraud in online advertising, in all the directions you can think of and some you probably haven't. Here's the paper.


I nominate Ben Edelman for Sheriff.

Electric Car Stations in Hawaii

How can you enact a move from a gas station based fueling grid to an electric charging station based grid? Easy - start on an island. Behind this effort is Better Place, a California based start up with a vision of creating a network of charging stations for electric cars.

"California-based company Better Place will operate the stations on a subscription-based system. Owners could sign-up for a monthly plan or choose to pay as they use. The company will own the batteries, which can run upwards to $11,000, and loan them out to drivers."

http://gas2.org/2008/10/07/hawaii-to-get-electric-car-battery-sharing-program/

Organs for transplantation

The Economist has a good article summarizing The gap between supply and demand for transplantable organs around the world, and the various ways in which organs are and have been obtained, and some of the factors that get in the way of increasing supply.

The article has a table that makes the often overlooked point that the U.S. has very high donation rates of both live and deceased donor organs compared to most other countries*, despite having an opt-in system (you aren't a donor unless you (or your next of kin) says you are). But the shortage persists...

*The U.S. has the second highest live donor rate after Iran, which has a market for kidneys, and second highest deceased donor rate after Spain. When I spoke about kidney exchange at the Barcelona Clinic in 2004, the transplant coordinators there attributed their success to the professionalization of the job of acquiring deceased donor organs.

hat tip to Juan Camilo Cardenas

Auctions for airline takeoff and landing slots, continued

Feds Go Forward With NYC Airport Experiment

Plans for slot auctions at LaGuardia, Kennedy, and Newark continue, but it sounds like the fight is far from over.

"Federal transportation officials say much of the reason for nationwide flight delays is that airlines have tried to cram too many planes -- and too many small planes -- onto New York runways, and the overscheduling just isn't realistic.
To fix that, they have capped the number of flights coming into or out of those airports, and now intend to auction off a fraction of those coveted slots to airline bidders. An auction, they say, will use market forces of supply and demand to make the flight schedule more efficient."
...
" Critics of the plan are furious.
''It is simply shocking that the DOT is unabashedly continuing this ideological battle despite the staunch opposition from the entire aviation community and the independent finding that the DOT lacks the power under the law to implement the proposal in the first place,'' Sen. Charles Schumer, D-N.Y., said in a statement."

Adoption in Korea

Korea Aims to End Stigma of Adoption and Stop ‘Exporting’ Babies

"Daunted by the stigma surrounding adoption here, Cho Joong-bae and Kim In-soon delayed expanding their family for years. When they finally did six years ago, Mr. Cho chose to tell his elderly parents that the child was the result of an affair, rather than admit she was adopted."

Market for political ads

A NYT story about presidential political ads caught my eye with the following observation about the fact that ads also garner free media:

"The ad showcased another ad strategy employed by both campaigns -- it was running only on national cable, a relatively inexpensive way of drawing media attention to an issue."

Prediction markets--history

Historical Political Futures Markets: An International Perspective by Paul W. Rhode, Koleman Strumpf - #14377 (DAE)

Abstract:

Political future markets, in which investors bet on election outcomes, are often thought a recent invention. Such markets in fact have a long history in many Western countries. This paper traces the operation of political futures markets back to 16th Century Italy, 18th Century Britain, and 19th Century United States. In the United States, election betting was a common part of political campaigns in the antebellum period, but became increasingly concentrated in the organized futures markets in New York City over the postbellum period.

http://papers.nber.org/papers/W14377

A rose by any other name: marriage market version

'Bride' and 'Groom' to Be Restored to Calif. Forms

"When same-sex marriage became legal in the state on June 16, new marriage forms were issued with ''Party A'' and ''Party B'' where ''bride'' and ''groom'' used to be.
The new paperwork, which county clerks must start using Nov. 17, will have space for applicants' names next to optional boxes for checking ''bride'' or ''groom.'' "

Gaming the system, changing the rules. Pro Football

Rules evolve, as changes are made in reaction to unwanted behavior that the old rules elicit. The NFL will now allow coaches to communicate by radio directly with defensive players, reducing the need for hand signals.

The NY Times reports:
"Maybe defensive coaches should thank New England Coach Bill Belichick for trying to steal their signals. The N.F.L. had discussed giving the communication system to defenses in previous years, but in 2006, the measure fell two votes short of approval.
"Last spring, after Belichick was found to be videotaping opponents’ defensive signals, teams approved the plan by two votes. The nays were cast mostly by teams with offensive-minded coaches. The decision largely minimized the need for the hand signals that Belichick had been trying to glean. The Patriots were among the teams that switched their vote, from opposed to in favor. "

Market for Basketball Players

At 19, Plotting New Path to N.B.A., via Europe
The NY Times reports that "The N.B.A. changed its eligibility rules for the 2006 draft, requiring players to be at least a year past their high school graduating class before turning pro."
That has sent some high school stars to college, but another path is to play pro ball in Europe, while waiting for the NBA.

Market design by committee

In the NY Times, A Snarl of Regulation quotes Secretary Paulson:
"Few, if any, will defend our current Balkanized system as optimal"
It comes with a diagram of the current financial regulatory organizations.

Auctioneers and sellers: Sotheby's mixed role

The WSJ reports Sotheby's Faces Suit Over Disclosure
"Mr. Minor's attorneys say he purchased the work on advice from a Sotheby's specialist and didn't realize the auction house was selling the work to recoup money owed it by another collector. ...
Mr. Minor's suit highlights the increasingly blurred lines that can develop at auction houses between their traditional role as disinterested auctioneers and their emerging business as direct stakeholders or financiers of the work they auction. In their competition for market share and their battle to secure top art work, Sotheby's and Christie's are increasingly acquiring, trading and preselling stakes in works they auction."
...
"For buyers, deciphering the financial dealings behind a work of art has become increasingly difficult. In some cases, like Mr. Minor's, auction houses sell the work as collateral for loans. More commonly, they issue so-called "guarantees" -- promises to pay the seller a minimum price for the work sold through the auction house. The auction house has to pay the guarantee even if the work doesn't sell, so it becomes an effective stakeholder.
Guarantees have surged in recent years. Last year, Sotheby's issued $902 million in guarantees, double the amount in 2006, according to securities filings."

Slow liquidation of Wachovia Short Term Fund

The NY Times reports: Colleges Scramble as Investment Fund Freezes.
To avoid a run as it liquidates (with withdrawals outpacing the ability of the fund to sell its short term assets in an orderly way), Wachovia has limited the rate at which its investors (colleges) can withdraw.

Prison economy

The WSJ writes about currency substitutes for trade among inmates in
American prisons (subscription required):

Mackerel Economics in Prison Leads to Appreciation for Oily Fillets
Packs of Fish Catch On as Currency, Former Inmates Say; Officials Carp

"Unlike those more expensive delicacies, former prisoners say, the mack is a good stand-in for the greenback because each can (or pouch) costs about $1 and few -- other than weight-lifters craving protein -- want to eat it."

Prediction Markets at Best Buy

Best Buy is running one of the largest internal corporate prediction markets. The experiment raises interesting questions about incentives for managers whose projects are "listed" on the market, as well as questions about how to design simple interfaces that thousands of non-experts can use.

"When executives at electronics retailer Best Buy Co. want to know if a new product or idea is likely to succeed, they can seek the opinion of rank-and-file employees by turning to the company's "prediction market."

The market, called TagTrade, allows Best Buy's workers to trade imaginary stocks based on answers to managers' questions. The market's judgment has often proved to be more accurate than the company's official forecasts."

(subscription required to see full article)

The credit crisis: anatomy of a market failure

The NY Times reports on 36 Hours of Alarm and Action as Crisis Spiraled.

"...But contagion was already spreading. The problem posed by the Lehman bankruptcy was not the losses suffered by hedge funds and other investors who traded stocks or bonds with the firms. As federal officials had predicted, that turned out to be manageable. (That was one reason the government did not step in to save the firm.)
The real problem was that a handful of hedge funds that used the firm’s London office to handle their trades had billions of dollars in balances frozen in the bankruptcy. "

University tuition in England

Top universities are funded differently in the UK and the US:
Oxford's Chancellor Argues for Raising Tuition Fee .
Oxford would like to have more control over its tuition.

(Recall my earlier post: University tuition in Israel )

Auction design for bailout by treasury--Ausubel and Cramton

Peter Cramton writes: Dear Al,
Here is the longer version of my paper with Larry Ausubel on possible details of a troubled asset reverse auction. It might even be a good topic for your market design class.
"A Troubled Asset Reverse Auction" (with Lawrence M. Ausubel), Working Paper, University of Maryland, September 2008. [Presentation]

A Troubled Asset Reverse Auction
Lawrence M. Ausubel and Peter Cramton
30 September 2008
Summary
The US Treasury has proposed purchasing $700 billion of troubled assets to restore liquidity and solve the current financial crisis, using market mechanisms such as reverse auctions where appropriate. This paper presents a high-level design for a troubled asset reverse auction and discusses the auction design issues. We assume that the key objectives of the auction are to:
· provide a quick and effective means to purchase troubled assets and increase liquidity;
· protect the taxpayer by yielding a price for assets related to their value; and
· offer a transparent rules-based process that minimizes discretion and favoritism.
We propose a two-part approach.
Part 1. Groups of related securities are purchased in simultaneous descending clock auctions. The auctions operate on a security-by-security basis to avoid adverse selection. To assure that the auction for each security is competitive, the demand for each security is capped at the total quantity offered by all but the largest three sellers. Demand bids from private buyers are also allowed. The simultaneous clock auctions protect the taxpayer by yielding a competitive price for each security and allow bidders to manage liquidity constraints and portfolio risk. The resulting price discovery also improves the liquidity of the securities that are not purchased in the auctions.
Part 2. Following Part 1, the remaining quantity is purchased in descending clock auctions in which many securities are pooled together. To minimize adverse selection, reference prices are calculated for each security from a model that includes all of the characteristics of each security including the market information revealed in the security-by-security auctions of Part 1. Bids in the pooled auctions are specified in terms of a percentage of the reference price for each security.
The two parts are complementary. Part 1 quickly adds liquidity and establishes competitive market prices for many securities. Additional assets are then purchased in Part 2, taking full advantage of the market information revealed in Part 1.
Clock auctions have been used successfully in the electricity and natural gas sectors for assets worth tens of billions of dollars over the last seven years. Related approaches have been used to auction emission allowances, radio spectrum, timber rights, and rough diamonds.
The approach is feasible even on an extremely tight timetable. The development of the reference price model and data will require the most time to complete, but fortunately this is not needed until Part 2. The auctions of Part 1 can begin in a matter of weeks.
We limit the scope of the paper to taking the legislation as given and providing an auction design within the requirements of the legislation.
The paper is organized as follows. We begin by explaining the adverse selection problem that arises when different securities are pooled together. Then we provide an overview of the two-part reverse auction plan. Next we develop details of Part 1, the security-by-security auctions. We then present the motivation for the simultaneous descending clock auction. Next we present further details of Part 2, the pooled auctions. Then we explore how stock warrants and senior debt can be usefully incorporated into the purchases of troubled assets. Next we discuss the feasibility of successful implementation on an expedited schedule. We conclude that the design achieves the key objectives and can be implemented with minimal risk in a short period of time.

Job market; online and offline

A NY Times columnist surveys the uses of different job search technologies, from shoe leather, to the internet, to the social internet: Job Hunting Is, and Isn’t, What It Used to Be


"The big three sites are Monster.com, CareerBuilder.com and Yahoo HotJobs.com. Craigslist is also a popular option, as are those like Indeed.com and SimplyHired.com, which aggregate big and small jobs sites.
"Niche sites are also growing. Doctors can check out PracticeMatch.com; those seeking nonprofit work can go to Idealist.org. TheLadders.com is popular for job seekers looking for executive positions that pay more than $100,000 a year."


"Mr. Challenger suggests limiting yourself to surfing such sites only after dinner. Use the daytime to get out and meet people as much as possible."

Pollution permits: RGGI auction results

RGGI, Inc. reports on their first auction.

The WSJ environmental blog report, Capping Carbon: Northeast Utilities Pay to Pollute, But Does That Matter?, says that
"Six of the ten states in the scheme offered 12.5 million permits for power companies to pollute. Bidders actually wanted more than 50 million permits, a sign of serious interest among utilities in getting their hands on the permits. (And it was largely utilities that were bidding; organizers said power companies, rather than environmental groups or third-party traders, bought “most” of the allowances.)
But demand wasn’t strong enough to actually make the emissions permits expensive: The auction price of $3.07 a ton was a little bit above the minimum bid price of $1.86 a ton, and just below the $4-something figures bandied about ahead of the auction. In comparison, greenhouse-gas emissions permits in the European scheme are trading at about $37. "

A firm hired by RGGI to monitor the auction reports no problems. The report includes the following:
"Based on our monitoring of participant conduct in the auction, we find no
material evidence of collusion or manipulation by bidders. The vast majority of bids were submitted in line with competitive expectations."

College football bowls

How Economics May Lead to Better Football Games, an interview based on the paper
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).

Unraveling of college admissions--deadline creep

It's not just early action and early decision anymore; regular college admissions can also unravel. The Chronicle of Higher Education reports (Admissions Group Moves to Stop 'Deadline Creep') that
"The National Association for College Admission Counseling has a message for member institutions: Do not rush applicants into accepting offers.

On Saturday, during its annual meeting here, the association revised its professional guidelines to clarify that colleges may not solicit commitments from first-year applicants before May 1—the long-recognized notification deadline. In approving the new language, the association also affirmed that admissions offers must clearly state whether deposits submitted before May 1 are refundable.

Concerns about “deadline creep” prompted the revisions, said Ken Fox, departing chairman of Nacac’s Admissions Practices Committee. In recent years, some colleges have informed admitted students that they must accept or decline financial-aid offers before May 1, a violation of Nacac’s Statement of Principles of Good Practice. High-school counselors have also complained that some institutions pressure students by urging them to send housing deposits in March or April."

Furthermore
"On Saturday, Nacac also approved a change in its guidelines that will prohibit colleges from asking "regular-decision" applicants to rank their preferred colleges in order. Previously, the association stated only that colleges should not “require” such information, and some institutions continue to include the question on application materials, with the word “optional” beside it."

Repugnant transactions in France

Legendary French bistro Lipp accepts Coke— at arm's length (in their new Mexican branch:)

"There are about a hundred wines on the list, along with a wide range of beers and water — but the only fizzy drink in this most Gallic of French restaurants is Schweppes tonic, which was authorised, after anguished debate, to enable Lipp's British customers to enjoy gin à l'anglaise.
“We allowed that in the name of entente cordiale, but we have never sold a bottle of Coca-Cola,” Mr Guittard told The Times.The only customers who asked for it were children and foreign visitors such as Bill Clinton, who dined at Lipp in 2006.
The former US President wanted to wash down his cassoulet with a Coca-Cola “but we didn't give in and so he had bordeaux instead”, said Mr Guittard. "

Market for scientists

The market for biochemists is changing: pharma and biotech beckon, the path to academic tenure is strewn with obstacles:

"A decade after 26 members of the entering class of 1991 earned their Ph.D.s from Yale's elite molecular biophysics and biochemistry program, only one holds a tenured faculty position. But is an exodus from academia a bad thing?"
from And Then There Was One, Science 19 September 2008: 1622-1628.

Repugnant transactions in Australia and England: GM crops

In many parts of the world, barriers have been raised to the sale of Genetically Modified (GM) crops.

In Australia, they were legislated against, and now that legislation looks likely to be repealed.
Science 19 September 2008:Vol. 321. no. 5896, p. 1629 reports:
"Four years ago, the governing Labor Party in Western Australia (WA), the country's breadbasket, banned growing GM crops in the state. But after elections last week, the Liberal and National parties formed a coalition that will oust Labor--and the Liberals have promised to rescind the GM moratorium."

In England, where GM crops aren't forbidden, Prince Charles has headed the opposition:
"The mass development of genetically modified crops risks causing the world's worst environmental disaster, The Prince of Wales has warned...
"The Prince, in an exclusive interview with the Daily Telegraph, also expressed the fear that food would run out because of the damage being wreaked on the earth's soil by scientists' research.
He accused firms of conducting a "gigantic experiment I think with nature and the whole of humanity which has gone seriously wrong".
"Why else are we facing all these challenges, climate change and everything?".
Relying on "gigantic corporations" for food, he said, would result in "absolute disaster".

Market for certificates of deposit

Do I Hear 4%? On This Site, Banks Bid for Your Cash

The NY Times article talks about Money Aisle, a site on which banks bid for your deposit.

In passing, the article also talks about competition for bank advertisements; at Moneyaisle, banks only pay for customers who open accounts, rather than a pay per click model.

Repugnant transactions in Saudi Arabia

I call a transaction 'repugnant' if some people want to engage in it, but others don't want them to. In Saudi Arabia these often involve religious views.
The NY Times report that the Turkish soap opera Noor is very popular among Saudi women, but not among clerics: Arab TV Tests Societies’ Limits With Depictions of Sex and Equality .
"That divided response was apparent this month when Sheik Luhaidan, the Saudi cleric, made his comment about killing the owners of satellite TV stations that broadcast indecent material.
His comments were quickly rebroadcast, and an uproar ensued. Critics across the ideological spectrum, including some hard-line Saudis, berated him as having crossed the line. Some of the television networks Sheik Luhaidan appeared to be referring to are owned, after all, by members of the Saudi royal family.
Sheik Luhaidan, who is chief justice of Saudi Arabia’s highest legal authority, the Supreme Judicial Council, is said to have been surprised by all the controversy.
A few days later, apparently under pressure from senior figures in the Saudi government, he appeared on state television to explain. He said he had not meant to encourage or condone the murder of station owners. Assuming other penalties do not deter them, he said, the owners should first be brought to trial and sentenced to death — and then they could be executed."

For some other, related examples, see
Saudi Arabia bans sale of dogs, cats in capital, and
Saudi Arabia bans all things red ahead of Valentine's Day.

However, as elsewhere, what transactions are repugnant can change over time, in both directions, and things formerly repugnant can become less so:
Saudi Women Can Now Stay in Hotels Alone

Market designer in chief

Propublica compares the presidential candidates' thoughts on market design

Incentives for kidneys

AAKP Supports Bill to Clarify Law Regarding Incentives for Organ Donations

The American Association of Kidney Patients writes to the Senate, saying
“As the waiting list for organs grows ever longer, it is time to allow government controlled trials of financial incentives to help increase the number of organ donors. A financial incentive is not necessarily a cash payment: for example, a donor could receive something as simple as lifelong health insurance, or families could receive funeral benefits for the deceased donors.”

The New York Sun has an article on the bill to be introduced by Senator Arlen Spector (the Organ Donation Clarification Act of 2008). The article says of the bill "It faces little opposition, and could pass when Congress returns in November or next year. "
Aside from the fact that the Senate is a bit busy right now, based on my observations of repugnance and how it sometimes constrains markets, I'm guessing that the assessment of little opposition will not prove to be correct.

The market for old clothes

In Haiti: The Afterlife of American Clothes
Haitian entrepreneurs find value in our castoffs.

Houses cost more in the summer. Here’s why

Tim Harford, reporting on the work of Rachel Ngai and Silvana Tenreyro of the London School of Economics, suggests it has to do with the thickness of the market.

He says "If Ngai and Tenreyro are right, then the housing market dynamic is something like this: buyers slightly prefer to buy houses in the summer, so house prices are slightly higher in the summer, so sellers prefer to put their houses on the market in the summer, and with more houses on the market, the market is thicker. That means that buyers are more likely to find the exact house they want, and so are willing to pay more; with prices higher, more sellers are attracted into the summer market, and fewer will contemplate selling in the winter. And so on. The self-reinforcing process can produce a large gap between summer and winter prices."

Virginity testing: Repugnant under S. African law...

Zulus Eagerly Defy Ban on Virginity Test
S. Africa's Progressive Constitution Collides With Tribal Customs

"Yes!" the girls, ages 14 to 18, said in unison, when asked if they liked virginity testing. They, like their elders, were adamant about the ban.

Auction design for bailout by treasury

Peter Cramton and Larry Ausubul weigh in, in "Auction Design Critical for Rescue Plan" in The Economists' Voice

"An auction that determines a
real price for a given security needs to require
multiple holders of the security to compete
with one another. This can be achieved if the
Treasury purchases only some, not all, of any
given security."

"Thus, a better approach would be for the
Treasury to instead conduct a separate auction
for each security and limit itself to buying
perhaps 50% of the aggregate face value. Again,
the auction starts at a high price and works its
way down. If the security clears at 30 cents on
the dollar, this means that the holders value
it at 30 cents on the dollar. (If the value were
only 15 cents, then most holders would supply
100% of their securities to be purchased at 30
cents, and the price would be pushed lower.)
The auction then works as intended. The price
is reasonably close to value. The “winners” are
the bidders who value the asset the least and
value liquidity the most.
This auction has an important additional
benefit. The “losers” are not left high and dry.
By determining the market clearing price, the
auction increases liquidity for the remaining
50% of face value, as well as for related securities.
The auction has effectively aggregated market
information about the security’s value. This
price information is the essential ingredient
needed to restore the secondary market for
mortgage backed securities."

Market for online music

The Digital Media Association announces a new agreement on how to pay royalties for music that is heard but not saved.

Repugnance and the financial bailout

There are lots of important market design issues being debated on-the-fly regarding the bailout of financial institutions. I am not surprised to see that repugnance seems to be playing a role. In President Bush's speech last night, for example:
“The American people are angry about executive compensation, and rightly so,” he said. “No one understands pay for failure.”

Market for display ads

In view of the big market that has developed for ads linked to internet search, there is a lot of interest in improving the market for display ads ("banner ads"). See Yahoo Overhauls System for Selling Display Ads

Market for litigation--litigation pools

I had an interesting email exchange today with John Mackall of the law firm Seed Mackall LLP in Santa Barbara, and he encouraged me to post it on this blog.

On Wed, 24 Sep 2008, John Mackall wrote:

> Dear Prof. Roth:
>
> I read about your kidney market contributions in the most recent
> Harvard Magazine, and since then I have reviewed your blog.
>
> For several years I have speculated about several new ways to approach
> litigation, which must certainly be the biggest and least organized
> "market" in the country.
>
> I have wondered about how game theory might be applied to the
> resolution of thousands of lawsuits at a time, for example. The idea
> would be to select from game theory one or two methods of dispute
> resolution, and then see if it would be possible to identify a set of
> perhaps 1,000 lawsuits that would be particularly amenable to
> resolution in that manner. For example, three party car accidents in
> which four or five large automobile insurance carriers share the majority of the liability. These could be resolved much more efficiently in large groups-100 or
> 1,000-rather than case by case. Cake cutting algorithms or other game
> theory tools would be much easier to use in bulk.
>
> I have also wondered about lawsuits among Fortune 1000 companies.
> There might be cases in which Company A is suing Company B for $10
> million, and Company B is suing Company C for the same amount, and
> Company C is suing Company A for the same amount. Simple chains like
> that might be identified, in which the chain might be resolved much
> more easily than any one link (lawsuit) in the chain. More complex,
> non-obvious chains might also be identified. There are many
> sophisticated analytical systems in math, and in finance there are
> many tools, that could be applied to identify and resolve various
> large groups of seemingly unrelated lawsuits, particularly if there is
> some cohesion to the larger group.
>
> My goal is to put together an academic group that would draw on
> business, law and certain hard sciences-math (such as number theory
> and game theory) and statistics especially-to see if there is some way
> to settle thousands of cases at once in ways that have not yet been
> conceived. The first step would be to identify theoretical
> approaches, and the next step would be to consider whether there are
> "sets" of lawsuits that meet the theoretical requirements.
>
> This idea falls somewhere between grand and grandiose. I am not sure
> where, exactly. If you have any interest, let me know.
>
> Sincerely,
>
> John R. Mackall
> Harvard '71, Stanford Law School '73

From: Alvin E. Roth
Sent: Wednesday, September 24, 2008 11:18 AM
To: John Mackall
Cc: aroth@hbs.edu
Subject: Re: Designing Markets--Litigation

Hi: the idea sounds interesting, but as a natural skeptic (as market designers must be) let me raise two top of the head concerns.

In an insurance pool, while the insurance companies have many cases, the victims have only one, and might not be in a position to accept a compromise that was good on average if it didn't work for them.

The pool of corporate lawsuits sounds much more likely not to have that problem. But (like patent pools), if there's going to be a pool of lawsuits, maybe I should file some extra lawsuits, i.e. there could be bad incentives that would change the pool of lawsuits, even if you had a good way of litigating an existing pool of lawsuits.

So...I think it's an interesting idea, and I'm happy to hear how it develops, but those are my concerns on first blush.

cheers,
al


Date: Wed, 24 Sep 2008 14:19:48 -0700
From: John Mackall
To: Alvin E. Roth Subject:
RE: Designing Markets--Litigation

Al:

Thanks for your prompt response.

Both points have occurred to me. One I can solve. In the insurance cases, I specify a set of multiple defendant cases for a reason: the defendants would resolve the liability among themselves, and leave the plaintiff out of the equation. The resolution would not be of the plaintiff's lawsuit itself, but of the secondary question as to how the damages are to be allocated. They can then present a united defense.

Your second point raises the possibility of gaming the system by filing lawsuits to score points in the game. Yes, this possibility exists, and I think it would be likely in some degree. I don't think it would swamp the overall benefits however.

I would be delighted if you would simply mull this over. Perhaps in the future you might have a student or two that would be interested, and if so, I would be delighted to help in any way.

Sincerely,
John Mackall

Purchase for Progress

Gates Foundation to Fund Experimental Food Aid Program

"UNITED NATIONS, Sept. 24 -- The world's largest philanthropy on Wednesday announced an initiative to transform the way the U.N. World Food Program purchases food by helping poor, small-scale farmers in undernourished countries of Africa and Latin America sell their surplus crops at competitive prices.
The Purchase for Progress program is designed to help combat hunger and poverty in the developing world by giving farmers, many of them women with little or no access to commercial markets, opportunities to reach reliable buyers, including the World Food Program. In a five-year pilot period, the $76 million program hopes to increase the incomes of 350,000 such farmers in 21 countries, including 15 in sub-Saharan Africa."

Pollution permits: RGGI auction

The Regional Greenhouse Gas Inititative prepares to hold its first auction tomorrow: Emissions auction aims to be US model
Power plants in 10 states will bid on the right to pollute

"The first auction is really just a small release of allowances to the market for price discovery purposes," he said. "I think a lot of people will just be kind of testing the waters."

Here is the RGGI; auction results will be posted here. The auction will be a uniform price, sealed bid auction. A full set of documents is here.

Experiments played a role in the design process, see

Auction Design for Selling CO2 Emission Allowances Under the
Regional Greenhouse Gas Initiative
Final Report
October 26, 2007
Investigators:
Charles Holt, William Shobe
University of Virginia
Dallas Burtraw, Karen Palmer
Resources for the Future
Jacob Goeree
California Institute of Technology

Design of the bailout

The demand for market designers:
"Paulson, while seeking maximum flexibility, said the Treasury is considering doing auctions one asset class at a time. He said the aim to bring “bright people” to work on the challenge of designing market mechanisms." (This sounds like a job for Paul Milgrom).

Hat tip to Eric Budish (who is on the market as a market designer this year).

Job market for couples

Two-career households are an important part of the labor force, particularly in academia. Hiring them can be part of a department or school's strategy. See Law Schools Hiring Faculty Couples, from Brian Leiter's Law School Reports.

(Note to students: we'll be covering couples in the medical labor market in either lecture 2 or 3....see
Roth, A.E., "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Journal of Political Economy, 92, 1984, 991-1016.
and
Roth, A. E. and Elliott Peranson, "The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design," American Economic Review, 89, 4, September, 1999, 748-780.

Philosophy job market

A story on the philosophy department at Auburn University contains some insights into the whole philosophy supply chain, from attracting students to sending them to grad school to recruiting professors. The philosophy job market is in some ways unusual even for an academic job market. An interesting window on it (occasionally) is Leiter Reports: A Philosophy Blog

Vacancy chains in Manhattan real estate

The NY Times reports that the current credit crunch means that real estate buyers in Manhattan, especially those who have to be approved by a co-op board, are often having to sell their previous home before they meet the credit requirements to buy. For Buyers, Many Roadblocks

Congestion in the market for parking spaces

The NY Times has a story called The Year of the Parking Space that touches on many parking related developments in NY. The most interesting part concerns congestion: lots of resources are spent trying to find parking spots.

"Meanwhile, the Department of Transportation is trying congestion rate parking in Greenwich Village as well as in and around Midwood to reduce double parking and cruising for available spots this fall. A recent Transportation Alternatives study on underpriced curbside parking on the Upper West Side found that drivers on Columbus Avenue cruise a total of 366,000 miles a year, producing 325 tons of carbon dioxide, at a cost to drivers of $130,000 per year in wasted fuel and more than 50,000 hours spent circling in traffic.
Further down the line? The department is trying to allow people to pay for parking via cellphones.
But for high-tech parking, San Francisco trumps us. They are developing a wireless sensor network that will announce which spaces are free at any moment. "

The Transportation Alternatives report linked in the excerpt is worth looking at. It begins in a way that makes clear why this is a market design problem:

"Every driving trip begins and ends with parking. But the demand for curbside parking in New York City far exceeds the supply. This mismatch is greatly compounded by the fact that curbside parking is free or priced far below garage rates, which are 10-15 times more expensive .
The low price of curbside parking unleashes a torrent of bargain-hunting drivers. Those who find spaces stay longer to make the most of their find. And when all spaces at the curb are occupied, other cars looking for parking circle in traffic for an elusive space. The saturation of curbside parking is a direct cause of air pollution, illegal parking and traffic congestion, all of which exact high costs on New York City’s environment, economy, health and quality of life."

The college admissions/ college guide market

The NY Times has a story on a new web-based (and advertising supported) guide to colleges, unigo.com .

Ticket pricing

Lots of markets (including entry-level labor markets) have more uniform prices than economists customarily suppose. Tickets for sporting events, for example, typically cost the same regardless of the quality of the opponents. (Teams have often been afraid of alienating fans, who it was thought might find it repugnant to pay more for more exciting games.) The Los Angeles Lakers propose to change that: Lakers will have higher ticket prices for seven games in 2008-09.

Hat tip to Steve Leider (who will be on the new economist labor market this year:)

Delay banking for air traffic

NASA proposes Delay banking for managing air traffic. The idea is that an airline whose flight was delayed by air traffic controllers would gain some 'delay points' that could be used to bid for early landing in (other) congested situations.

For some reason, NASA has taken out a patent on this idea. (The patent system is itself meant to be a solution to a certain kind of market design problem. The granting of patents to these kinds of "business practices" raises some questions about that solution. )

Repugnant transactions in Australia

Australian pub offers free alcohol for knickerless women.

Mayor Janet Cribbes slammed the promotion in the local press.
"It fuels the fire for irresponsible drinking, irresponsible behaviour and puts young women at risk and makes them more vulnerable to sexual assault," she said.
"I'd thought they would have learnt their lesson from the dwarf episode. We'll be paying them a visit soon, I'd say."

Bibliography of matching--update

I maintain a web-based Bibliography of matching and market design, and it is getting harder to keep it up to date as the field grows. (This is a good problem to have. If you have some papers that should be there, please send me a list in a form I can cut and paste:) I just added/updated the following papers by Fuhito Kojima:

Incentives and Stability in Large Two-Sided Matching Markets (2007), with Parag A. Pathak, American Economic Review, forthcoming.

Random Assignment of Multiple Indivisible Objects (2007), forthcoming, Mathematical Social Sciences.

Matching with Contracts: Comment (2007), with John William Hatfield, American Economic Review, forthcoming..

Games of School Choice under the Boston Mechanism with General Priority Structures (2007), Social Choice and Welfare, forthcoming.

The Law of Aggregate Demand and Welfare in the Two-Sided Matching Market (2007),
Economics Letters, forthcoming.

When can Manipulations be Avoided in Two-Sided Matching Markets? Maximal Domain Results (2007),
The B.E. Journal of Theoretical Economics (contribution), Article 32.

Matching and Price Competition: Comment (2007),
American Economic Review 97, pp 1027-1031.

Random Paths to Pairwise Stability in Many-to-Many Matching Problems: A Study on Market Equilibration (2006), with M. Utku Ünver,
International Journal of Game Theory (the Special Issue in Honor of David Gale), 2008.

Mixed Strategies in Games of Capacity Manipulation in Hospital-Intern Markets (2006),
Social Choice and Welfare 27, pp 25-28.

Strategy-Proofness of the Probabilistic Serial Mechanism in Large Random Assignment Problems (2007), with Mihai Manea

Competitive Claims and Resource Allocation by Deferred Acceptance (2007), with Mihai Manea,

Finding All Stable Matchings with Couples (2007), revise

Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms (2008), with Yeon-Koo Che

Group Incentive Compatibility for Matching with Contracts (2007), with John William Hatfield

Substitutes and Stability for Matching with Contracts (2007), with John William Hatfield

ReRegulation of the financial markets

A lot of market design is done, thoughtfully or on the fly, by regulators. A good overview of recent events in the financial market meltdown is at
Freakonomics: Diamond and Kashyap on the Recent Financial Upheavals

Incentives in (British) medicine

The Telegraph reports on the Annual Congress of the British Orthopaedic Association: Severely injured patients are being delayed specialist care because Government targets mean hospitals are encouraged to operate on routine cases first, experts have warned.

"Routine cases such as hip and knee replacements have to be carried out within Government waiting time targets meaning urgent trauma cases are delayed which can jeopardise their recovery."

The Google-Yahoo deal

Hal Varian's thoughts on the Google-Yahoo deal are here: The SearchIgnite study on ad prices and the Yahoo-Google deal.

Ben Edelman's are here.

Science (and Economics?) and Religion

The Church of England (in the person of the Rev Dr Malcolm Brown, their director of Mission and Public Affairs) has published a belated apology to Charles Darwin, called Good religion needs good science. For those of us worried about the sometimes contentious relation between economics and religion, in connection with repugnant transactions, for example, it is worth reading.

Dr Brown notes "It is hard to avoid the thought that the reaction against Darwin was largely based on what we would now call the 'yuk factor' (an emotional not an intellectual response) when he proposed a lineage from apes to humans."

His concluding paragraph:
"Charles Darwin: 200 years from your birth, the Church of England owes you an apology for misunderstanding you and, by getting our first reaction wrong, encouraging others to misunderstand you still. We try to practice the old virtues of 'faith seeking understanding' and hope that makes some amends. But the struggle for your reputation is not over yet, and the problem is not just your religious opponents but those who falsely claim you in support of their own interests. Good religion needs to work constructively with good science – and I dare to suggest that the opposite may be true as well."

University tuition in Israel

Israel has several remarkably good universities, all heavily regulated by the state. Recently some private colleges have opened. The following story from Yedhiot suggests the government might allow universities some freedom in setting tuition. (We'll see...)
Appropriation committee defies education minister, permits each university to set own tuition fee level. Student Union vows it will put up fight

Kidneys in Canada

The Kidney Foundation of Canada applauds recent government announcement to improve organ donation:

Canada is taking steps to promote kidney exchange by establishing a database of patient-donor pairs.

And various Canadian provinces (BC in 2006 and Ontario and Manitoba in 2008) have initiated programs to reimburse out of pocket expenses of live organ donors,and some very limited lost income reimbursement. While the laws that prohibit organ sales often explicitly allow reimbursement of expenses, jurisdictions have been slow to authorize reimbursement, for fear of starting down the slippery slope towards payment for organs.

Market for textbooks

Don’t Buy That Textbook, Download It Free in the NY Times:

"In protest of what he says are textbooks’ intolerably high prices — and the dumbing down of their content to appeal to the widest possible market — Professor McAfee has put his introductory economics textbook online free. ...“This market is not working very well — except for the shareholders in the textbook publishers,” he said. “We have lots of knowledge, but we are not getting it out.”

Black market for kidneys in Singapore

A Singapore businessman sentenced for attempting to buy a kidney from a villager in Indonesia has highlighted the shortage of kidneys available for transplants and has fueled a national debate on the legalization of organ trade.

Market for professors

A brief comparison of some features of the academic marketplaces in Argentina, France, and Germany is given in The Worst Academic Profession Career Structures by Philip G. Altbach and Christine Musselin.

Euthanasia

Repugnant transactions in Europe:
"In his homily, the pope said the ill should pray to find ''the grace to accept, without fear or bitterness, to leave this world at the hour chosen by God.'' The Vatican vehemently maintains that life must continue to its natural end.
The message has special resonance in Europe. Belgium and the Netherlands have legalized euthanasia, and Switzerland allows counselors or physicians to prepare a lethal dose, though patients must take it on their own."

From NY Times: Pope to sick: Accept death at hour chosen by God

Matching for zoo keepers

Calling a matchmaking site a studbook might be too blunt for most dating sites. But zookeepers need a thick market to find the right matches: see the NY Times on Seeking Mates for Furred and Clawed . (NB to matchmaking entrepreneurs, it's too late to reserve the URL studbook.com, that's already an active site.)

Wind farms

It may seem strange for an entrepreneur to call for more government regulation, but when it comes to energy, that is what Mandelstam is doing. “As a student of history, you go back to a guy named Thomas Edison, and his first power plant, and the thing one has to point out is that the government and regulators have been integrally enmeshed in the energy business ever since it began on Pearl Street in 1882.” He points to Europe as an exemplar: “We were the world leader in wind. Europe overtook us quite a while ago and continues to beat us all the time because they got the public policy right.” Wise regulation, according to Mandelstam, and a thoughtful debate about energy policy is the best way to correct that. “Let’s line up all the subsidies of coal and nuclear power and oil and natural gas and wind — and let’s have a debate,” Mandelstam urges. “That hasn’t happened in the last eight years, and now, frankly, we’re paying the price for it.”

From the NY Times Sunday Magazine article Wind-Power Politics.

Used book stores

One of the markets most changed by the rise of the internet is the market for used books. Back in the day, people visiting Cambridge MA, for example, might put aside some time to browse the used book stores. The idea was that you probably had a mental list of out of print books you were looking for. No more. If you want an out of print book, you can search online and buy it from a distant seller. The NY Times book review has an essay today, Attack of the Megalisters, nostalgic for the old days.

(Hat tip to Muriel Niederle.)

Market for nurses

The Washington Post runs a story whose sub-headline is Recruitment Plans Focus On Working Conditions Over Financial Rewards . Apparently salary isn't the only way to compete for scarce nurses. Job satisfaction matters too. Who knew?

Airline safety: incentives and reporting

The NY Times has a story on airline safety, Panel Backs Letting Airlines Confess Errors Unpunished . Airlines and doctors have very different practices about reporting errors: there's more public reporting of "near misses" and other events in the domain of air traffic control, but docs have morbidity conferences in which they talk among themselves about bad outcomes.

Pay for performance in medicine

The NY Times has an essay called The Pitfalls of Linking Doctors’ Pay to Performance .

Presumed consent for organ donation

Repugnance: The Telegraph reports on objections to proposals to institute a presumed consent rule in Britain, where, as in the US, there is a big shortage transplantable organs.

Auctions for airline slots

A good idea that isn't going anywhere quickly is an auction for airline slots in the most congested airports. Here's a recent story from the Washington Post.

Introduction

Peter Coles and I are starting this blog in connection with our Fall 2008 Market Design course at Harvard. It is meant as a place to post news stories related to market design (including stories related to repugnant markets), and to think about market design ideas generally if briefly. For students, it is meant not to replace but to supplement the course page (where the class handouts will still be found). It also won't replace my market design page, although there will likely be links back and forth.

We are new bloggers, so please bear with us while we learn what this is good for. Our initial plan is to post only sporadically.