Journals are the clearinghouses of academic economics, providing the proximate demand for the articles that economists supply. In my previous post (Science journals and science journalism) I discussed the fact that economics journals have a much longer delay between submission and publication than journals in science and medicine. Some of this has to do with the reviewing process.
Preston McAfee, a veteran editor, has written a wise and not so funny* article about the editing process, based on his long experience at the AER and, more recently, Economic Inquiry (where he initiated a policy of allowing authors to opt for an accept or reject decision without revision).
I recommend the article, even though it is difficult to summarize. It is not an apologia; he says:
"The way economists operate journals is perhaps the most inefficient operation I encounter on a regular basis."
*He also says "There is a lot of heartbreak in journal editing since most of the job is rejecting papers. If you are looking for amusing anecdotes, subscribe to Readers’ Digest."
Monday, March 16, 2009
Sunday, March 15, 2009
Science journals and science journalism
After my recent post The production of news: The NEJM news cycle about the effects of the New England Journal of Medicine's news embargo policy on the production of news stories, I corresponded with two of the young leaders in the new economics of media, Matt Gentzkow and Jesse Shapiro. They pointed out that, aside from increasing the number of stories, an embargo might increase their quality, by preventing a "race to the bottom" in which the shortest, least well reported stories can come out before more carefully researched stories. With an embargo, reporters don't have an incentive to rush to publish, they know they can work on their story up until the embargo expires.
A separate issue was raised in an article Matt pointed me to, one that I had already noticed sharply distinguishes scientific journals like the NEJM and Science, which publish short articles weekly, from journals like the ones economists normally publish in, which publish longer articles, much less frequently, and with much longer delay. In Ingelfinger, Embargoes, and Other Controls on the Dissemination of Science News, Vincent Kiernan explores not only the effect of embargos, but also of the "Ingelfinger rule" (named after a former NEJM editor), which is that NEJM, Science, etc. won't publish an article that has in any substantial way been made available before publication. So, in particular, papers appearing in those journals can't first be posted on the web as working papers.
This is in stark contrast to the way economists work; the usual practice these days for an economist who finishes a paper is to put it up on the web even before it has been submitted for publication. Economics journals function as the archival sources of papers, not as the place they are first distributed. And this predates the internet; economists have communicated via pre-publication working papers at least since I entered the business, after the invention of the printing press, but before the word processor.
Partly this difference has to do with the speed of publication. A paper accepted by Science or the NEJM will likely appear not too many months after it has been submitted, while the process at most economics journals takes well over a year (and two is not so unusual). As a result, the weekly science journals seek to be a combination of science journals and science news sources, in a way that economics journals do not.
The difference between the two was first brought home to me in 1990, when I received a call from the then editor of Science, which turned into a proposal that I write an article for them summarizing work I had done studying various labor markets for new doctors. I had circulated a working paper on that subject in 1989, and at the time of the phone call from Science it was forthcoming in the American Economic Review, in 1991. I told the editor of Science that I would have to check with the AER, but that if I wrote the article, it would state clearly that it was a summary of the longer AER article. He replied that he would like to have the article, provided the short summary in Science came out before the original article in the AER.
I called Orley Ashenfelter, who was then the editor of the AER, and he said something very close to "go ahead and give Science the summary, a five page paper can't scoop a twenty five page paper." His feeling was that as long as the AER had the definitive version, there was no problem. And that is how I came to have two papers on that subject, published out of order, in
Roth, A.E., "New Physicians: A Natural Experiment in Market Organization," Science, 250, 1990, 1524-1528.
and
Roth, A.E., "A Natural Experiment in the Organization of Entry Level Labor Markets: Regional Markets for New Physicians and Surgeons in the U.K.," American Economic Review, Vol. 81, June 1991, 415-440.
(These papers were posted to the web so long ago that they are html versions made from the original text files, rather than pdf versions of the actual publications.)
A separate issue was raised in an article Matt pointed me to, one that I had already noticed sharply distinguishes scientific journals like the NEJM and Science, which publish short articles weekly, from journals like the ones economists normally publish in, which publish longer articles, much less frequently, and with much longer delay. In Ingelfinger, Embargoes, and Other Controls on the Dissemination of Science News, Vincent Kiernan explores not only the effect of embargos, but also of the "Ingelfinger rule" (named after a former NEJM editor), which is that NEJM, Science, etc. won't publish an article that has in any substantial way been made available before publication. So, in particular, papers appearing in those journals can't first be posted on the web as working papers.
This is in stark contrast to the way economists work; the usual practice these days for an economist who finishes a paper is to put it up on the web even before it has been submitted for publication. Economics journals function as the archival sources of papers, not as the place they are first distributed. And this predates the internet; economists have communicated via pre-publication working papers at least since I entered the business, after the invention of the printing press, but before the word processor.
Partly this difference has to do with the speed of publication. A paper accepted by Science or the NEJM will likely appear not too many months after it has been submitted, while the process at most economics journals takes well over a year (and two is not so unusual). As a result, the weekly science journals seek to be a combination of science journals and science news sources, in a way that economics journals do not.
The difference between the two was first brought home to me in 1990, when I received a call from the then editor of Science, which turned into a proposal that I write an article for them summarizing work I had done studying various labor markets for new doctors. I had circulated a working paper on that subject in 1989, and at the time of the phone call from Science it was forthcoming in the American Economic Review, in 1991. I told the editor of Science that I would have to check with the AER, but that if I wrote the article, it would state clearly that it was a summary of the longer AER article. He replied that he would like to have the article, provided the short summary in Science came out before the original article in the AER.
I called Orley Ashenfelter, who was then the editor of the AER, and he said something very close to "go ahead and give Science the summary, a five page paper can't scoop a twenty five page paper." His feeling was that as long as the AER had the definitive version, there was no problem. And that is how I came to have two papers on that subject, published out of order, in
Roth, A.E., "New Physicians: A Natural Experiment in Market Organization," Science, 250, 1990, 1524-1528.
and
Roth, A.E., "A Natural Experiment in the Organization of Entry Level Labor Markets: Regional Markets for New Physicians and Surgeons in the U.K.," American Economic Review, Vol. 81, June 1991, 415-440.
(These papers were posted to the web so long ago that they are html versions made from the original text files, rather than pdf versions of the actual publications.)
Saturday, March 14, 2009
Personalized advertising
As the world wide web is increasingly accessed by mobile devices (equipped with GPS, and used largely by a single individual) the ability to narrowly target advertisements is increasing: Advertisers Get a Trove of Clues in Smartphones .
"Advertisers will pay high rates for the ability to show, for example, ads for a nearby restaurant to someone leaving a Broadway show, especially when coupled with information about the gender, age, finances and interests of the consumer. "
"Applications that use GPS can offer even more specificity, including Loopt, Yelp, Urbanspoon, Where and almost any iPhone application that shows the pop-up box saying it “would like to use your current location.” Several firms are experimenting with a program called AisleCaster that can offer specials based on a person’s exact location in a supermarket aisle or mall.
Advertising systems can track not only the location of the phone, but also that person’s travel pattern: uptown New York to Nob Hill in San Francisco, for instance."
"For now, there are not enough people using smartphones to make it worthwhile for advertisers to use highly specific criteria. But as more people switch to smartphones, that will happen more frequently."
The article also discusses the privacy issue, and whether customers will be "creeped out" by ads that reveal how specifically they have been targeted. (I wonder if people will find it equally creepy to be targeted by a computer from a big database that no human looks at as by a human being at a dinner time call center...)
"Advertisers will pay high rates for the ability to show, for example, ads for a nearby restaurant to someone leaving a Broadway show, especially when coupled with information about the gender, age, finances and interests of the consumer. "
"Applications that use GPS can offer even more specificity, including Loopt, Yelp, Urbanspoon, Where and almost any iPhone application that shows the pop-up box saying it “would like to use your current location.” Several firms are experimenting with a program called AisleCaster that can offer specials based on a person’s exact location in a supermarket aisle or mall.
Advertising systems can track not only the location of the phone, but also that person’s travel pattern: uptown New York to Nob Hill in San Francisco, for instance."
"For now, there are not enough people using smartphones to make it worthwhile for advertisers to use highly specific criteria. But as more people switch to smartphones, that will happen more frequently."
The article also discusses the privacy issue, and whether customers will be "creeped out" by ads that reveal how specifically they have been targeted. (I wonder if people will find it equally creepy to be targeted by a computer from a big database that no human looks at as by a human being at a dinner time call center...)
Friday, March 13, 2009
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
"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
Thursday, March 12, 2009
The production of news: The NEJM news cycle
My previous post was about the recent kidney exchange innovation by the Alliance for Paired Donation, just reported in today's issue of the New England Journal of Medicine. That NEJM immediately attracted some press, and in this post I consider the role that the NEJM's press embargo policy might play in generating news stories about some of the articles they publish.
The press policy of the NEJM is communicated to authors as follows (emphasis added):
"Your Brief Report will appear in the March 12, 2009 issue of the New England Journal of Medicine (NEJM). This information is confidential. There is a press embargo on the contents of the issue until 5:00 PM ET on Wednesday March 11, 2009. On Friday, March 6, 2009 the content of the March 12, 2009 issue will made available to reporters who have agreed to respect our embargo. "
That is, a week before publication, the NEJM makes the forthcoming issue available to reporters who have agreed not to write about it until a specified time the next week.
To better understand how this kind of policy plays out, I asked a public relations person about the NEJM and their policy, and got the following reply:
"...they have a reputation of being one of the best PR machines there is. Their embargo is one of the toughest on the planet as well; reporters and any others who violate it are dead for the rest of their lives in getting information on future NEJM articles. Anyone in the medical writing community knows and fears this."
At 9 pm on March 11, four hours after the embargo ended, here's what a Google news search for "kidney exchange" looked like (note the link to "all 217" news articles):
Kidney-transplant chain broadens donations
Boston Globe - 1 hour ago
Dr. Frank Delmonico of Massachusetts General Hospital, one of the architects of the New England Program for Kidney Exchange, disagreed. ...
New Computer Models Successfully Link Donors And Kidney Transplant ... Science Daily (press release)
Living Kidney Donation Chains May Help More Get Transplants U.S. News & World Report
Chain results in 10 kidney swaps among strangers The Associated Press
Pittsburgh Post Gazette
all 217 news articles »
The first of these articles, in the Globe, was written by a reporter who talked to several of the participants, concentrating on those in Boston (which is where the economists on the team all reside, and also where another kidney exchange program, the New England Program for Kidney Exchange was started). The second (in Science Daily) is a press release issued by Boston College (where my economist colleagues Tayfun Sonmez and Utku Unver both teach). Some of the remaining stories have original content, but many are largely if not completely taken from some of the original reporting and press material. (I like the story that ran in the Washington Post, because it has a slideshow that shows off Mike Rees, the innovative--and apparently good looking--surgeon who is the lead author of the NEJM article, and a figure of emerging importance in the national discussion of kidney exchange).
So...I've written a lot of articles that attract little or no press, and certainly not a flood in a few hours. While kidney exchange is undoubtedly a subject with wider popular appeal than, say, the lattice structure of fixed points, I'm guessing that the NEJM's embargo policy plays at least some role (recall the comment that they are one of the best PR machines...). Here are three hypotheses--one psychological and two economic--about why the embargo might matter.
Hypothesis 1 (behavioral/psychological): telling reporters they can't publish before 5PM Wednesday makes them want to write about the story more...
Hypothesis 2. (coordination equilibrium): telling reporters that no one can publish before 5PM Wednesday reassures them that the time they put into the story won't be wasted, they won't be scooped by someone else who finishes their story earlier.
Hypothesis 3. (common value/winner's curse): in the absence of an embargo, a reporter tempted to try to write the first story might be worried that the absence of previous stories means that the subject isn't as interesting as it looks, won't be picked by editors, etc. To put it another way, whoever writes the first story might be (like the high bidder in a common value auction) the person who thought it was the most interesting, and the fact that no one else agreed how interesting it was might mean that he has overestimated its value. But, when there is an embargo, this kind of negative selection can't be going on; no one else could have published earlier, so the absence of earlier stories isn't a negative signal.
(Blogs, incidentally, seem to work on a different schedule; here are the March 12 takes by Steve Levitt and by Tim Harford on the original story...)
Update: television works on a different schedule still: Mike Rees was interviewed later that evening (March 12) on the CBS Evening News: A Transplant Surgeon Matches 10 Donors With Recipients In The Longest Chain In History
The press policy of the NEJM is communicated to authors as follows (emphasis added):
"Your Brief Report will appear in the March 12, 2009 issue of the New England Journal of Medicine (NEJM). This information is confidential. There is a press embargo on the contents of the issue until 5:00 PM ET on Wednesday March 11, 2009. On Friday, March 6, 2009 the content of the March 12, 2009 issue will made available to reporters who have agreed to respect our embargo. "
That is, a week before publication, the NEJM makes the forthcoming issue available to reporters who have agreed not to write about it until a specified time the next week.
To better understand how this kind of policy plays out, I asked a public relations person about the NEJM and their policy, and got the following reply:
"...they have a reputation of being one of the best PR machines there is. Their embargo is one of the toughest on the planet as well; reporters and any others who violate it are dead for the rest of their lives in getting information on future NEJM articles. Anyone in the medical writing community knows and fears this."
At 9 pm on March 11, four hours after the embargo ended, here's what a Google news search for "kidney exchange" looked like (note the link to "all 217" news articles):
Kidney-transplant chain broadens donations
Boston Globe - 1 hour ago
Dr. Frank Delmonico of Massachusetts General Hospital, one of the architects of the New England Program for Kidney Exchange, disagreed. ...
New Computer Models Successfully Link Donors And Kidney Transplant ... Science Daily (press release)
Living Kidney Donation Chains May Help More Get Transplants U.S. News & World Report
Chain results in 10 kidney swaps among strangers The Associated Press
Pittsburgh Post Gazette
all 217 news articles »
The first of these articles, in the Globe, was written by a reporter who talked to several of the participants, concentrating on those in Boston (which is where the economists on the team all reside, and also where another kidney exchange program, the New England Program for Kidney Exchange was started). The second (in Science Daily) is a press release issued by Boston College (where my economist colleagues Tayfun Sonmez and Utku Unver both teach). Some of the remaining stories have original content, but many are largely if not completely taken from some of the original reporting and press material. (I like the story that ran in the Washington Post, because it has a slideshow that shows off Mike Rees, the innovative--and apparently good looking--surgeon who is the lead author of the NEJM article, and a figure of emerging importance in the national discussion of kidney exchange).
So...I've written a lot of articles that attract little or no press, and certainly not a flood in a few hours. While kidney exchange is undoubtedly a subject with wider popular appeal than, say, the lattice structure of fixed points, I'm guessing that the NEJM's embargo policy plays at least some role (recall the comment that they are one of the best PR machines...). Here are three hypotheses--one psychological and two economic--about why the embargo might matter.
Hypothesis 1 (behavioral/psychological): telling reporters they can't publish before 5PM Wednesday makes them want to write about the story more...
Hypothesis 2. (coordination equilibrium): telling reporters that no one can publish before 5PM Wednesday reassures them that the time they put into the story won't be wasted, they won't be scooped by someone else who finishes their story earlier.
Hypothesis 3. (common value/winner's curse): in the absence of an embargo, a reporter tempted to try to write the first story might be worried that the absence of previous stories means that the subject isn't as interesting as it looks, won't be picked by editors, etc. To put it another way, whoever writes the first story might be (like the high bidder in a common value auction) the person who thought it was the most interesting, and the fact that no one else agreed how interesting it was might mean that he has overestimated its value. But, when there is an embargo, this kind of negative selection can't be going on; no one else could have published earlier, so the absence of earlier stories isn't a negative signal.
(Blogs, incidentally, seem to work on a different schedule; here are the March 12 takes by Steve Levitt and by Tim Harford on the original story...)
Update: television works on a different schedule still: Mike Rees was interviewed later that evening (March 12) on the CBS Evening News: A Transplant Surgeon Matches 10 Donors With Recipients In The Longest Chain In History
Wednesday, March 11, 2009
Advances in kidney exchange, in the New England Journal of Medicine
One of the satisfying things about the ongoing collaboration between economists and kidney surgeons is that sometimes the results are very concrete. Today's New England Journal of Medicine reports on such a case in the article:
Rees, Michael A., Jonathan E. Kopke, Ronald P. Pelletier, Dorry L. Segev, Matthew E. Rutter, Alfredo J. Fabrega, Jeffrey Rogers, Oleh G. Pankewycz, Janet Hiller, Alvin E. Roth, Tuomas Sandholm, Utku Ünver, and Robert A. Montgomery, “A Non-Simultaneous Extended Altruistic Donor Chain,” New England Journal of Medicine, 360;11, March 12, 2009.
The paper reports a chain of kidney surgeries that resulted in ten transplants. It began with an altruistic donor, and was able to accomplish so many transplants because they didn't all have to be done simultaneously.
There's a simple economic idea at work here. Mostly in kidney exchange, all the surgeries are done simultaneously. The reason is that if two patient-donor pairs are exchanging kidneys, and if one pair were to donate a kidney to the other first, and the other were subsequently unable or unwilling to reciprocate, the pair that donated the kidney would be severely harmed; not only wouldn't they get the kidney they had been counting on, but they would have donated their donor's kidney and thus be unable to participate in a future exchange. But if there is an altruistic donor who doesn't have a specific patient in mind, and if he or she gives to a patient-donor pair, and they can't subsequently continue the chain, that is a loss, but no one is irreparably harmed. So, when chains begin with an undirected donor, they don't have to be simultaneous, since the costs of a breach are less.
Mike Rees and the Alliance for Paired Donation are the heroes of this story: here is the APD's press release.
Here's a story from the Boston Globe, that emphasizes the Boston/economist connection of Roth, Sonmez and Unver: Kidney-transplant chain broadens donations. Here's an article from the Pittsburgh Post Gazette that takes note of the collaboration with Carnegie Mellon computer scientists, represented in the NEJM paper by Tuomas Sandholm: Altruistic kidney donations.
Market for airline flights
As the pricing, scheduling, and seating options grow more complex, booking an airline ticket is looking more like a combinatorial auction. Some travel sites, like TripAdvisor and Kayak.com aim to help with that by displaying more clearly the available bundles of choices: A Clearing in the Fog of Complicated Booking.
" ' We’re bringing clarity to the marketplace, with disclosure up front,” said Bryan Saltzburg, the TripAdvisor general manager for new initiatives. More clarity and disclosure in the marketplace? Let’s hope it’s a trend."
" ' We’re bringing clarity to the marketplace, with disclosure up front,” said Bryan Saltzburg, the TripAdvisor general manager for new initiatives. More clarity and disclosure in the marketplace? Let’s hope it’s a trend."
Tuesday, March 10, 2009
Financial market design: the view from the Fed
Fed chairman Ben Bernanke, in a speech today (March 10) to the Council on Foreign Relations, after speaking of immediate steps to bail out financial institutions, talks about ways in which the financial markets might be redesigned in the longer term.
"At the same time that we are addressing such immediate challenges, it is not too soon for policymakers to begin thinking about the reforms to the financial architecture, broadly conceived, that could help prevent a similar crisis from developing in the future. We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components. In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim.
Today, I would like to talk about four key elements of such a strategy. First, we must address the problem of financial institutions that are deemed too big--or perhaps too interconnected--to fail. Second, we must strengthen what I will call the financial infrastructure--the systems, rules, and conventions that govern trading, payment, clearing, and settlement in financial markets--to ensure that it will perform well under stress. Third, we should review regulatory policies and accounting rules to ensure that they do not induce excessive procyclicality--that is, do not overly magnify the ups and downs in the financial system and the economy. Finally, we should consider whether the creation of an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing."
Regarding the financial infrastructure, he mentions among other things that
"To help alleviate counterparty credit concerns, regulators are also encouraging the development of well-regulated and prudently managed central clearing counterparties for OTC trades. Just last week, we approved the application for membership in the Federal Reserve System of ICE Trust, a trust company that proposes to operate as a central counterparty and clearinghouse for CDS transactions. "
On the subject of clearinghouses, he goes on to say
"The Federal Reserve and other authorities also are focusing on enhancing the resilience of the triparty repurchase agreement (repo) market, in which the primary dealers and other major banks and broker-dealers obtain very large amounts of secured financing from money market mutual funds and other short-term, risk-averse sources of funding.
...
it may be worthwhile considering the costs and benefits of a central clearing system for this market, given the magnitude of exposures generated and the vital importance of the market to both dealers and investors. "
His comments on "procyclicality" e.g. on making sure that regulation of capital reserves don't cause banks to cut back lending just when credit needs to be loosened, are also worth reading. His concluding paragraph is a sober look at market design contemplated (as it often must be) in advance of reliable scientific knowledge, but in light of recent experience:
"Financial crises will continue to occur, as they have around the world for literally hundreds of years. Even with the sorts of actions I have outlined here today, it is unrealistic to hope that financial crises can be entirely eliminated, especially while maintaining a dynamic and innovative financial system. Nonetheless, these steps should help make crises less frequent and less virulent, and so contribute to a better functioning national and global economy."
"At the same time that we are addressing such immediate challenges, it is not too soon for policymakers to begin thinking about the reforms to the financial architecture, broadly conceived, that could help prevent a similar crisis from developing in the future. We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components. In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim.
Today, I would like to talk about four key elements of such a strategy. First, we must address the problem of financial institutions that are deemed too big--or perhaps too interconnected--to fail. Second, we must strengthen what I will call the financial infrastructure--the systems, rules, and conventions that govern trading, payment, clearing, and settlement in financial markets--to ensure that it will perform well under stress. Third, we should review regulatory policies and accounting rules to ensure that they do not induce excessive procyclicality--that is, do not overly magnify the ups and downs in the financial system and the economy. Finally, we should consider whether the creation of an authority specifically charged with monitoring and addressing systemic risks would help protect the system from financial crises like the one we are currently experiencing."
Regarding the financial infrastructure, he mentions among other things that
"To help alleviate counterparty credit concerns, regulators are also encouraging the development of well-regulated and prudently managed central clearing counterparties for OTC trades. Just last week, we approved the application for membership in the Federal Reserve System of ICE Trust, a trust company that proposes to operate as a central counterparty and clearinghouse for CDS transactions. "
On the subject of clearinghouses, he goes on to say
"The Federal Reserve and other authorities also are focusing on enhancing the resilience of the triparty repurchase agreement (repo) market, in which the primary dealers and other major banks and broker-dealers obtain very large amounts of secured financing from money market mutual funds and other short-term, risk-averse sources of funding.
...
it may be worthwhile considering the costs and benefits of a central clearing system for this market, given the magnitude of exposures generated and the vital importance of the market to both dealers and investors. "
His comments on "procyclicality" e.g. on making sure that regulation of capital reserves don't cause banks to cut back lending just when credit needs to be loosened, are also worth reading. His concluding paragraph is a sober look at market design contemplated (as it often must be) in advance of reliable scientific knowledge, but in light of recent experience:
"Financial crises will continue to occur, as they have around the world for literally hundreds of years. Even with the sorts of actions I have outlined here today, it is unrealistic to hope that financial crises can be entirely eliminated, especially while maintaining a dynamic and innovative financial system. Nonetheless, these steps should help make crises less frequent and less virulent, and so contribute to a better functioning national and global economy."
Job fairs and flower shows
Job fairs, which are intended to reduce search costs and make it easier for recruiters and recruits to find each other, seem to persist both in good times, when it may be hard for firms to fill their openings, and in hard times, when it may be hard for job seekers to find firms with openings:
At Career Fairs, Anxiety and Hope for Job-Seekers.
Flower shows, which are similarly intended to make it easier for big nurseries and their potential customers to find each other, only recover their costs when there are lots of potential customers: Economic Crisis Takes a Toll on Flower Shows. So the recession is causing many traditionally annual shows to be cancelled.
At Career Fairs, Anxiety and Hope for Job-Seekers.
Flower shows, which are similarly intended to make it easier for big nurseries and their potential customers to find each other, only recover their costs when there are lots of potential customers: Economic Crisis Takes a Toll on Flower Shows. So the recession is causing many traditionally annual shows to be cancelled.
Monday, March 9, 2009
Prediction markets: why aren't they used more?
While prediction markets have a distinguished history, and are currently used in some interesting applications, the Economist magazine writes: Prediction markets: An uncertain future, A novel way of generating forecasts has yet to take off.
"NOT SO long ago, prediction markets were being tipped as a fantastic new way to forecast everything from the completion date of a vital project to a firm’s annual sales. But although they have spread beyond early-adopting companies in the technology industry, they have still not become mainstream management tools. Even fervent advocates admit much remains to be done to convince sceptical managers of their value. “It’s still a pretty evangelical business,” says Leslie Fine of CrowdCast, one of the firms that provide trading platforms for companies keen to pool the collective wisdom of their employees."
The Economist has some hypotheses about the difficulties so far:
"A big hurdle facing managers using prediction markets is getting enough people to keep trading after the novelty has worn off. "...
"Another reason prediction markets flop is that employees cannot see how the results are used, so they lose interest. "...
"Bosses may also be wary of relying on the judgments of non-experts."
At Crowdcast (formerly Xpree) they have a market design hypothesis. They blog in response to the Economist article:
"we believe prediction markets are not yet mainstream because the current solutions rely on mechanisms designed for the stock market, not for the enterprise."
(N.B. A blog that follows prediction markets is Midas Oracle .ORG )
"NOT SO long ago, prediction markets were being tipped as a fantastic new way to forecast everything from the completion date of a vital project to a firm’s annual sales. But although they have spread beyond early-adopting companies in the technology industry, they have still not become mainstream management tools. Even fervent advocates admit much remains to be done to convince sceptical managers of their value. “It’s still a pretty evangelical business,” says Leslie Fine of CrowdCast, one of the firms that provide trading platforms for companies keen to pool the collective wisdom of their employees."
The Economist has some hypotheses about the difficulties so far:
"A big hurdle facing managers using prediction markets is getting enough people to keep trading after the novelty has worn off. "...
"Another reason prediction markets flop is that employees cannot see how the results are used, so they lose interest. "...
"Bosses may also be wary of relying on the judgments of non-experts."
At Crowdcast (formerly Xpree) they have a market design hypothesis. They blog in response to the Economist article:
"we believe prediction markets are not yet mainstream because the current solutions rely on mechanisms designed for the stock market, not for the enterprise."
(N.B. A blog that follows prediction markets is Midas Oracle .ORG )
Sunday, March 8, 2009
College admissions decisions: signaling and waiting
Right now, American high school seniors who have applied to colleges are mostly waiting to hear where they will be admitted. (The major exceptions are seniors who applied and were admitted to a college through a single-application, binding early admissions program, in which they agreed in advance to attend if accepted.) Once the colleges make their acceptance decisions, it will be their turn to wait, to see which students will accept their offers. Because of the recession, there is more uncertainty than usual: In a Shifting Era of Admissions, Colleges Are Sweating.
So colleges are trying to determine which students are likely to come if admitted, and the signals that students send (and have sent) in this regard may turn out to be important in admissions decisions.
"Typically, they rely on statistical models to predict which students will take them up on their offers to attend. But this year, with the economy turning parents and students into bargain hunters, demographics changing and unexpected jolts in the price of gas and the number of applications, they have little faith on those models.
...
"In response, colleges are trying new methods to gauge which applicants are serious about attending: Wake Forest, in North Carolina, is using Webcam interviews, while other colleges say they are scrutinizing essays more closely."
...
"Colleges consider an amalgam of factors, comparing them to past trends, to predict whether a student will attend, including, for example, what high school he went to; the strength of his grades, scores and recommendations; how much financial aid he has been offered; and whether he plays the cello or wants to study ethnobotany or economics. (If he is a she, the equation looks different still.)
They consider how many phone calls, Web hits, campus visits and applications they have received. "
Hat tip to Neil Dorosin of the Institute for Innovation in Public School Choice (IIPSC).
So colleges are trying to determine which students are likely to come if admitted, and the signals that students send (and have sent) in this regard may turn out to be important in admissions decisions.
"Typically, they rely on statistical models to predict which students will take them up on their offers to attend. But this year, with the economy turning parents and students into bargain hunters, demographics changing and unexpected jolts in the price of gas and the number of applications, they have little faith on those models.
...
"In response, colleges are trying new methods to gauge which applicants are serious about attending: Wake Forest, in North Carolina, is using Webcam interviews, while other colleges say they are scrutinizing essays more closely."
...
"Colleges consider an amalgam of factors, comparing them to past trends, to predict whether a student will attend, including, for example, what high school he went to; the strength of his grades, scores and recommendations; how much financial aid he has been offered; and whether he plays the cello or wants to study ethnobotany or economics. (If he is a she, the equation looks different still.)
They consider how many phone calls, Web hits, campus visits and applications they have received. "
Hat tip to Neil Dorosin of the Institute for Innovation in Public School Choice (IIPSC).
Saturday, March 7, 2009
Microstructure of Macro Behavior
In connection with the launch of the paperback version of his book The Logic of Life, Tim Harford has a nice video illustrating one of Tom Schelling's demonstrations of how market outcomes may not reflect the preferences of any individual market participant: The Logic of Life: Racial Segregation and Thomas Schelling.
Schelling's demo had to do with a residential real estate market in which everyone preferred to live in a racially integrated neighborhood in which people of their own race were in a slight majority, and how the resulting dynamics could lead to segregation that nobody wanted. Harford's video dramatizes this with brown and white eggs.
(The title of this blog post comes from Micromotives and Macrobehavior, Schelling's wonderful book on the subject, originally published in 1978.)
Schelling's demo had to do with a residential real estate market in which everyone preferred to live in a racially integrated neighborhood in which people of their own race were in a slight majority, and how the resulting dynamics could lead to segregation that nobody wanted. Harford's video dramatizes this with brown and white eggs.
(The title of this blog post comes from Micromotives and Macrobehavior, Schelling's wonderful book on the subject, originally published in 1978.)
School choice in Europe
I've frequently blogged about the design of school choice systems, and that is in part because the problems of school choice are so widespread, and difficult.
In Flanders, where there is a first-come-first-served allocation system, parents have been camped out for a week in winter weather to secure places for their children (here is a story, in Flemish, with a picture).
In England, where lotteries decide many school allocations, the costs of randomness are being felt: Identical twins go to schools 18 miles apart.
We now do better than that in NYC and Boston.
In Flanders, where there is a first-come-first-served allocation system, parents have been camped out for a week in winter weather to secure places for their children (here is a story, in Flemish, with a picture).
In England, where lotteries decide many school allocations, the costs of randomness are being felt: Identical twins go to schools 18 miles apart.
We now do better than that in NYC and Boston.
Friday, March 6, 2009
Another contested auction, and some precautions
In an earlier post, Auction disruption by fake bids, I followed an auction of Chinese artifacts that was opposed by the Chinese government, and was ultimately disrupted when the high bidder indicated that his bid was fraudulent. Today's news is of an auction in Manhattan of Gandhi memorabilia (a watch and some other personal property) opposed by the Indian government (which had offered a pre-emptive bid of $20,000 for the items in an attempt to halt the sale, and had obtained an injunction in an Indian court when this was refused): Gandhi Items Sold for $1.8 Million.
The high bidder was an Indian national who may or may not be planning to donate the items to the Indian government. The auction house took some steps intended to protect themselves against the kind of disruption by false bid that occurred in the auction of Chinese artifacts.
"For the first time, Antiquorum Auctioneers, which focuses on watches, is requiring banking references, said Mr. Maron, the chairman.
Recently, Cai Mingchao, a collector and auctioneer, raised an uproar after he submitted two winning bids for bronze sculptures from China’s Qing Dynasty at a Christie’s auction in Paris. Mr. Cai later refused to pay for the items, saying he had deliberately sabotaged the auction because the sculptures had been illegally looted in the 19th century from an imperial palace outside Beijing.
“We are concerned about what happened at Christie’s,” Mr. Maron said in a phone interview. "
The high bidder was an Indian national who may or may not be planning to donate the items to the Indian government. The auction house took some steps intended to protect themselves against the kind of disruption by false bid that occurred in the auction of Chinese artifacts.
"For the first time, Antiquorum Auctioneers, which focuses on watches, is requiring banking references, said Mr. Maron, the chairman.
Recently, Cai Mingchao, a collector and auctioneer, raised an uproar after he submitted two winning bids for bronze sculptures from China’s Qing Dynasty at a Christie’s auction in Paris. Mr. Cai later refused to pay for the items, saying he had deliberately sabotaged the auction because the sculptures had been illegally looted in the 19th century from an imperial palace outside Beijing.
“We are concerned about what happened at Christie’s,” Mr. Maron said in a phone interview. "
Thursday, March 5, 2009
Trust and trustworthiness: promoting and maintaining it
Trust is essential for all sorts of transactions, and how to set up institutions to promote trust and trustworthiness in the marketplace is a big concern of market design.
It is even a big concern of armies trying to win the hearts and minds of a population in the face of a guerrilla insurgency. There's a very interesting essay in the Washington Post about earning, maintaining and restoring trust, by Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff: Building Our Best Weapon.
On a more technical note, I'm reading Community Structure and Market Outcomes: Towards a Theory of Repeated Games in Networks by Itay Fainmesser (who you can try to hire next year). He is interested how patterns of connections between buyers and sellers can promote trustworthy behavior through repeated play, and how the effort to achieve trust in the marketplace by engaging in long term relationships may exclude some parties from the market. In this connection he writes "...repeated interactions cannot perfectly substitute for institutions..."
The kinds of institutions he is thinking of are both legal (if you can sue me for non-performance, this makes it easier to trust me), and reputational (if you can give me a credible negative review that will impede my ability to transact in the future, this also makes it easier to trust me).
As it happens, I've also been reading about the recent redesign of eBay's reputational system: "ENGINEERING TRUST - RECIPROCITY IN THE PRODUCTION OF REPUTATION INFORMATION," - by Gary Bolton, Ben Greiner, and Axel Ockenfels. It is a very nice market design paper.
They describe some of the design concerns behind eBay's 2007 rollout of its new, more detailed feedback system, in which buyers are able to give some feedback on sellers anonymously. In particular, they describe how they and eBay became concerned that the old reputation system became less informative than it might have been, because the pattern of reciprocally positive feedback concealed underlying dissatisfactions. They describe how (both prospectively and retrospectively) they compared the relevant field data, and how laboratory experiments helped verify the intuitions gained in that way, and allowed them to see the efficiency effects of an improved reputation system.
It is even a big concern of armies trying to win the hearts and minds of a population in the face of a guerrilla insurgency. There's a very interesting essay in the Washington Post about earning, maintaining and restoring trust, by Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff: Building Our Best Weapon.
On a more technical note, I'm reading Community Structure and Market Outcomes: Towards a Theory of Repeated Games in Networks by Itay Fainmesser (who you can try to hire next year). He is interested how patterns of connections between buyers and sellers can promote trustworthy behavior through repeated play, and how the effort to achieve trust in the marketplace by engaging in long term relationships may exclude some parties from the market. In this connection he writes "...repeated interactions cannot perfectly substitute for institutions..."
The kinds of institutions he is thinking of are both legal (if you can sue me for non-performance, this makes it easier to trust me), and reputational (if you can give me a credible negative review that will impede my ability to transact in the future, this also makes it easier to trust me).
As it happens, I've also been reading about the recent redesign of eBay's reputational system: "ENGINEERING TRUST - RECIPROCITY IN THE PRODUCTION OF REPUTATION INFORMATION," - by Gary Bolton, Ben Greiner, and Axel Ockenfels. It is a very nice market design paper.
They describe some of the design concerns behind eBay's 2007 rollout of its new, more detailed feedback system, in which buyers are able to give some feedback on sellers anonymously. In particular, they describe how they and eBay became concerned that the old reputation system became less informative than it might have been, because the pattern of reciprocally positive feedback concealed underlying dissatisfactions. They describe how (both prospectively and retrospectively) they compared the relevant field data, and how laboratory experiments helped verify the intuitions gained in that way, and allowed them to see the efficiency effects of an improved reputation system.
Wednesday, March 4, 2009
Student loans
"If Congress approves the plan, there will be no need to set subsidies because there will be no banks to subsidize. "
No no, not the current bank bailout (although it's easy to see how that sentence could be misinterpreted). In this case it refers to an auction the federal government is planning to hold to determine which lenders will be authorized to issue federally subsidized student loans: Education Dept. Forges Ahead With Student-Loan Auction. The idea is that banks would submit bids indicating how much federal subsidy they would require to issue student loans on agreed terms, and the lowest subsidies would win.
But "...by the time the auction process is complete, it could be moot. President Obama has called for abolishing the guaranteed-loan program altogether. If Congress approves the plan, there will be no need to set subsidies because there will be no banks to subsidize. "
No no, not the current bank bailout (although it's easy to see how that sentence could be misinterpreted). In this case it refers to an auction the federal government is planning to hold to determine which lenders will be authorized to issue federally subsidized student loans: Education Dept. Forges Ahead With Student-Loan Auction. The idea is that banks would submit bids indicating how much federal subsidy they would require to issue student loans on agreed terms, and the lowest subsidies would win.
But "...by the time the auction process is complete, it could be moot. President Obama has called for abolishing the guaranteed-loan program altogether. If Congress approves the plan, there will be no need to set subsidies because there will be no banks to subsidize. "
Tuesday, March 3, 2009
Markets for studying
The NY Times reports on incentive programs designed to motivate students to study, and on some apparent controversy between economists and psychologists interested in the subject: Rewards for Students Under a Microscope.
My colleague Roland Fryer is organizing several of these incentive programs, in collaboration with schools in NYC, Washington DC, and Chicago, through Ed Labs at Harvard.
The Times story reports that some psychologists are skeptical, because of concerns that incentives may damage intrinsic motivation:
"Still, many psychologists warn that early data can be deceiving. Research suggests that rewards may work in the short term but have damaging effects in the long term.
...
"This kind of psychological research was popularized by the writer Alfie Kohn, whose 1993 book “Punished by Rewards: The Trouble With Gold Stars, Incentive Plans, A’s, Praise and Other Bribes” is still often cited by educators and parents. Mr. Kohn says he sees “social amnesia” in the renewed interest in incentive programs.
“If we’re using gimmicks like rewards to try to improve achievement without regard to how they affect kids’ desire to learn,” he said, “we kill the goose that laid the golden egg.” "
But the story gives Roland the last word:
"Meanwhile, Dr. Fryer of Ed Labs urges patience in awaiting the economists’ take on reward systems. He wants to look at what happens over many years by tracking subjects after incentives end and trying to discern whether the incentives have an impact on high school graduation rates.
With the money being used to pay for the incentive programs and research, “every dollar has value,” he said. “We either get social science or social change, and we need both.”"
My colleague Roland Fryer is organizing several of these incentive programs, in collaboration with schools in NYC, Washington DC, and Chicago, through Ed Labs at Harvard.
The Times story reports that some psychologists are skeptical, because of concerns that incentives may damage intrinsic motivation:
"Still, many psychologists warn that early data can be deceiving. Research suggests that rewards may work in the short term but have damaging effects in the long term.
...
"This kind of psychological research was popularized by the writer Alfie Kohn, whose 1993 book “Punished by Rewards: The Trouble With Gold Stars, Incentive Plans, A’s, Praise and Other Bribes” is still often cited by educators and parents. Mr. Kohn says he sees “social amnesia” in the renewed interest in incentive programs.
“If we’re using gimmicks like rewards to try to improve achievement without regard to how they affect kids’ desire to learn,” he said, “we kill the goose that laid the golden egg.” "
But the story gives Roland the last word:
"Meanwhile, Dr. Fryer of Ed Labs urges patience in awaiting the economists’ take on reward systems. He wants to look at what happens over many years by tracking subjects after incentives end and trying to discern whether the incentives have an impact on high school graduation rates.
With the money being used to pay for the incentive programs and research, “every dollar has value,” he said. “We either get social science or social change, and we need both.”"
Auction disruption by fake bids
In an earlier post, Markets and Fraud, I discussed the case of an environmental activist who disrupted an auction for oil and gas drilling rights by submitting the winning bids on several tracts. Now comes a report of an auction by Christies of some Chinese bronzes that the Chinese government claims as national cultural artifacts: Chinese Man Bids but Won’t Pay for Looted Bronzes , and Chinese Bidder Says He Won’t Pay for Looted Bronzes
"A man claiming to be the mysterious bidder who bought two Qing dynasty bronzes at an auction in Paris surfaced Monday, saying it was his patriotic duty to refuse to pay the $40 million winning bid.
A Chinese collector and auctioneer, Cai Mingchao, said at a news conference in Beijing he had made the anonymous winning bids for the 18th-century bronze heads of a rat and a rabbit. He described himself as a consultant with the Lost Cultural Relics Recovery Program, a nongovernmental group that seeks to bring looted artifacts back to China.
...
"On moral grounds, and as a way to protest the auction, Mr. Cai added, “I want to emphasize that the money won’t be paid.”"
"The Chinese government had attempted to halt the sale of the relics, saying they should be returned, not sold.
However, the government denied having anything to do with the fake bid."
...
"In a statement, Christie's said: ''We are aware of today's news reports. As a matter of policy, we do not comment on the identity of our consignors or buyers, nor do we comment or speculate on the next steps that we might take in this instance.''"
One aspect of auction design that may need greater attention if these kinds of disruptions become commonplace is how to qualify and verify bidders and winners, and notify other bidders in the event that winners default, so that auctions can be made more resistant to attack by fake bidders.
"A man claiming to be the mysterious bidder who bought two Qing dynasty bronzes at an auction in Paris surfaced Monday, saying it was his patriotic duty to refuse to pay the $40 million winning bid.
A Chinese collector and auctioneer, Cai Mingchao, said at a news conference in Beijing he had made the anonymous winning bids for the 18th-century bronze heads of a rat and a rabbit. He described himself as a consultant with the Lost Cultural Relics Recovery Program, a nongovernmental group that seeks to bring looted artifacts back to China.
...
"On moral grounds, and as a way to protest the auction, Mr. Cai added, “I want to emphasize that the money won’t be paid.”"
"The Chinese government had attempted to halt the sale of the relics, saying they should be returned, not sold.
However, the government denied having anything to do with the fake bid."
...
"In a statement, Christie's said: ''We are aware of today's news reports. As a matter of policy, we do not comment on the identity of our consignors or buyers, nor do we comment or speculate on the next steps that we might take in this instance.''"
One aspect of auction design that may need greater attention if these kinds of disruptions become commonplace is how to qualify and verify bidders and winners, and notify other bidders in the event that winners default, so that auctions can be made more resistant to attack by fake bidders.
Monday, March 2, 2009
Design of electricity markets (and salute to Bob Wilson)
For roughly the retail price of 1200 kilowatt hours of electricity, you can buy the Elsevier book Competitive Electricity Markets: Design, Implementation, Performance . (It seems to have been out for almost a year, but I've just noticed it now...)
I haven't read it yet, but the first chapter looks worthwhile: it is by Hung-Po Chao, Shmuel Oren, and Robert Wilson, and is called "Reevaluation of Vertical Integration and Unbundling in Restructured Electricity Markets."
Bob Wilson is of course the dean of design, one of the pioneers not only of the design of electricity markets, but of auction design generally. Here are some of his papers. (And for those of you who come only recently to the economics biz, and don't know what a role model looks like, here is his cv.) Chao and Oren and Wilson seem to have published their first joint paper on electricity in 1986.
While I'm remembering, I'm reminded that Bob's students produced an online Festschrift in his honor in 2002, called Game Theory in the Tradition of Bob Wilson. Here are the first paragraphs of the introduction, which was written by Bengt Holmstrom, Paul Milgrom, and myself.
"One of the nicer events in academic life is when we pause to recognize a scholar whose work is unusually important and influential, whose work marks the start of a new tradition.
"When that scholar is also a great teacher and advisor, his students have the added pleasure of recalling his influence on them, and how it is reflected both in their own scholarship, and in how they teach and advise their own students. Students are the generations through which traditions are transmitted. This volume of selected published papers by Bob’s students, accompanied by new introductory essays, is a celebration of Bob’s tradition, by those of us who had the exceptional good fortune to receive it at first hand.
"And what is this tradition? Scholarship as varied and wide ranging as Bob’s defies easy characterization. He was among the first to recognize that it was going to be of the utmost importance for game theorists to understand how information is distributed and manipulated, concealed, and revealed. He was among the first to emphasize the importance in strategic calculations of players’ beliefs about what other players would do, even in situations that were not anticipated to arise. But what especially marks him as a leader among the great economists of his generation is his view of the role of theory. In his understated way, he wrote in the preface to his book Nonlinear Pricing: “The value of theory is its usefulness in addressing practical problems. . . ” And he went on to reflect on the role of practical problems in his own scholarly development: “. . . for the theorist, the problems encountered by practitioners provide a wealth of topics.”
"So, game theory in the tradition of Bob Wilson is game theory in the service of economics as a confident, practical, useful discipline. And research in the style of Bob Wilson is work that takes its inspiration not only from a wide reading and deep understanding of the work of other academics, but also from the ordinary stuff of economic life. In this spirit, Bob’s work has produced not only acute conceptual insights of great generality, but also advice about and solutions to knotty problems of strategy and design."
I haven't read it yet, but the first chapter looks worthwhile: it is by Hung-Po Chao, Shmuel Oren, and Robert Wilson, and is called "Reevaluation of Vertical Integration and Unbundling in Restructured Electricity Markets."
Bob Wilson is of course the dean of design, one of the pioneers not only of the design of electricity markets, but of auction design generally. Here are some of his papers. (And for those of you who come only recently to the economics biz, and don't know what a role model looks like, here is his cv.) Chao and Oren and Wilson seem to have published their first joint paper on electricity in 1986.
While I'm remembering, I'm reminded that Bob's students produced an online Festschrift in his honor in 2002, called Game Theory in the Tradition of Bob Wilson. Here are the first paragraphs of the introduction, which was written by Bengt Holmstrom, Paul Milgrom, and myself.
"One of the nicer events in academic life is when we pause to recognize a scholar whose work is unusually important and influential, whose work marks the start of a new tradition.
"When that scholar is also a great teacher and advisor, his students have the added pleasure of recalling his influence on them, and how it is reflected both in their own scholarship, and in how they teach and advise their own students. Students are the generations through which traditions are transmitted. This volume of selected published papers by Bob’s students, accompanied by new introductory essays, is a celebration of Bob’s tradition, by those of us who had the exceptional good fortune to receive it at first hand.
"And what is this tradition? Scholarship as varied and wide ranging as Bob’s defies easy characterization. He was among the first to recognize that it was going to be of the utmost importance for game theorists to understand how information is distributed and manipulated, concealed, and revealed. He was among the first to emphasize the importance in strategic calculations of players’ beliefs about what other players would do, even in situations that were not anticipated to arise. But what especially marks him as a leader among the great economists of his generation is his view of the role of theory. In his understated way, he wrote in the preface to his book Nonlinear Pricing: “The value of theory is its usefulness in addressing practical problems. . . ” And he went on to reflect on the role of practical problems in his own scholarly development: “. . . for the theorist, the problems encountered by practitioners provide a wealth of topics.”
"So, game theory in the tradition of Bob Wilson is game theory in the service of economics as a confident, practical, useful discipline. And research in the style of Bob Wilson is work that takes its inspiration not only from a wide reading and deep understanding of the work of other academics, but also from the ordinary stuff of economic life. In this spirit, Bob’s work has produced not only acute conceptual insights of great generality, but also advice about and solutions to knotty problems of strategy and design."
Sunday, March 1, 2009
Medical data as an underprovided public good
Evidence based medicine requires data that are often difficult to assemble. Since drugs and medical devices are regulated, regulators have the option of requiring data to be collected. But data collection costs money (particularly in light of stringent laws that require the privacy of individual patients to be protected), and so it is often difficult to study the effect of medical interventions by following up on the health of patients.
A recent story summarized the issue succinctly: Heart Device Dispute Renews Push for User Registry
"Conflicting data this week about the failure rate of a critical and widely used Medtronic heart device has set off a debate among researchers who want to understand the discrepancies and the implications for patient care.
But some experts say that debate would not be occurring if federal officials, medical device makers and more doctors had thrown their weight more fully behind efforts to develop a national database of patients who get heart devices.
The Obama administration has announced plans to pour hundreds of millions of dollars into studies to compare the effectiveness of competing medical treatments and devices. Monitoring patients’ outcomes through registries could be part of that process.
But setting up such registries in this country has proved difficult so far. "
It seems that Medicare mandated the establishment of such a registry for defibrillators, but didn't fund it.
"And while defibrillator makers did help support the $3 million annual cost of operating the registry in its first year, they have since cut back that financing... Dr. Alan Kadish ... said he did not think that manufacturers believed that they would “be fulfilling their fiduciary obligations to shareholders by funding” studies that compare the effectiveness of their devices to those of competitors. " "
HT Scott Kominers
A recent story summarized the issue succinctly: Heart Device Dispute Renews Push for User Registry
"Conflicting data this week about the failure rate of a critical and widely used Medtronic heart device has set off a debate among researchers who want to understand the discrepancies and the implications for patient care.
But some experts say that debate would not be occurring if federal officials, medical device makers and more doctors had thrown their weight more fully behind efforts to develop a national database of patients who get heart devices.
The Obama administration has announced plans to pour hundreds of millions of dollars into studies to compare the effectiveness of competing medical treatments and devices. Monitoring patients’ outcomes through registries could be part of that process.
But setting up such registries in this country has proved difficult so far. "
It seems that Medicare mandated the establishment of such a registry for defibrillators, but didn't fund it.
"And while defibrillator makers did help support the $3 million annual cost of operating the registry in its first year, they have since cut back that financing... Dr. Alan Kadish ... said he did not think that manufacturers believed that they would “be fulfilling their fiduciary obligations to shareholders by funding” studies that compare the effectiveness of their devices to those of competitors. " "
HT Scott Kominers
Saturday, February 28, 2009
Real estate auctions for price discovery
Sales by auction are coming to the new condo market in New York City: And Do I Hear $2 Million? No? $1 Million? Sold!
"Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked"
...
"In the auctions run by Accelerated, only a portion of a building’s unsold units are sold in one swoop, to avoid depressing values more than necessary. The remainder are marketed the traditional way, at the new, lower auction prices. "
...
"Auctions have succeeded in loosening other battered markets, like South Florida. In two held there last fall by Accelerated, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction. "
The real estate auction firm mentioned in the article is Accelerated Marketing Partners, of Boston.
"Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked"
...
"In the auctions run by Accelerated, only a portion of a building’s unsold units are sold in one swoop, to avoid depressing values more than necessary. The remainder are marketed the traditional way, at the new, lower auction prices. "
...
"Auctions have succeeded in loosening other battered markets, like South Florida. In two held there last fall by Accelerated, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction. "
The real estate auction firm mentioned in the article is Accelerated Marketing Partners, of Boston.
Friday, February 27, 2009
Kidney Exchange in Australia
Western Australia has a new Kidney Exchange Program directed by Professor Paolo Ferrari of the University of Western Australia. Like kidney exchange programs in the U.S. they are finding the benefits of organizing exchanges as chains: Domino donations reduce kidney transplant wait .
"Prof Ferrari said he expected a national paired kidney exchange program to be established in 2009."
It looks like his confidence is well founded, since when the Prime Minister of Australia gave a speech on organ donation (Rudd opens Organ Donor Awareness Week), he included the following: "The [Australian Organ and Tissue Donation and Transplantation] Authority is also working to implement the new National Paired Kidney Exchange Program"
"Prof Ferrari said he expected a national paired kidney exchange program to be established in 2009."
It looks like his confidence is well founded, since when the Prime Minister of Australia gave a speech on organ donation (Rudd opens Organ Donor Awareness Week), he included the following: "The [Australian Organ and Tissue Donation and Transplantation] Authority is also working to implement the new National Paired Kidney Exchange Program"
Thursday, February 26, 2009
Market for hand crafted food
Like the town that was too small to support one lawyer, and so had to have two, Brooklyn is becoming a center of artisan-produced fine food: Brooklyn’s New Culinary Movement. Not only does a cluster of local food producers help build demand, they also support each other in production:
"To design a boning knife, Mr. Bukiewicz has been sitting in on Mr. Mylan’s butchering classes and taking note of how his hands move.
That sort of collaboration is common.
Two weeks ago Sixpoint Craft Ales, in Red Hook, introduced Dubbel Trubbel, an ale made with cacao nibs from Mast Brothers Chocolate. Sixpoint Craft Ales already brews Gorilla Warfare, an American porter made with Ethiopian Yirgacheffe from Gorilla Coffee, the Park Slope cafe and roaster. At Wheelhouse Pickles, based in Park Slope, Jon Orren uses wort, a byproduct of brewing from Sixpoint Craft Ales, to flavor his Ploughman’s pickle, a mild, earthy relish made with Greenmarket root vegetables.
And McClure’s Pickles, of Williamsburg, is making a strong, grainy mustard with Brooklyn Brewery’s Brown Ale. (Mr. McClure, by the way, sometimes pays his picklers in pickles.)
Local store owners play an important role, more collaborators than simply merchants. Urban Rustic, Spuyten Duyvil Grocery, Blue Apron Foods, Bedford Cheese Shop and Marlow & Daughters all make a point of carrying Brooklyn-made foods."
"To design a boning knife, Mr. Bukiewicz has been sitting in on Mr. Mylan’s butchering classes and taking note of how his hands move.
That sort of collaboration is common.
Two weeks ago Sixpoint Craft Ales, in Red Hook, introduced Dubbel Trubbel, an ale made with cacao nibs from Mast Brothers Chocolate. Sixpoint Craft Ales already brews Gorilla Warfare, an American porter made with Ethiopian Yirgacheffe from Gorilla Coffee, the Park Slope cafe and roaster. At Wheelhouse Pickles, based in Park Slope, Jon Orren uses wort, a byproduct of brewing from Sixpoint Craft Ales, to flavor his Ploughman’s pickle, a mild, earthy relish made with Greenmarket root vegetables.
And McClure’s Pickles, of Williamsburg, is making a strong, grainy mustard with Brooklyn Brewery’s Brown Ale. (Mr. McClure, by the way, sometimes pays his picklers in pickles.)
Local store owners play an important role, more collaborators than simply merchants. Urban Rustic, Spuyten Duyvil Grocery, Blue Apron Foods, Bedford Cheese Shop and Marlow & Daughters all make a point of carrying Brooklyn-made foods."
Market for Camembert
An important part of European Union trade law is the control of the Appellation d'origine contrôlée (AOC). (This is the locational brand name that, for example, makes Champagne--sparkling wine made in the French Champagne region using the methode champagnoise--different from Cava, the sparkling wine made in Spain by the same method. Which brings us to the question of Camembert de Normandie, the French cheese that, according to the Camembert Charter, must be made by hand from raw (unpasteurized) milk.
Because raw milk can harbor disease causing bacteria, the costs of making cheese safely from raw milk is greater than from pasteurized milk. Because of health concerns, the U.S. Food and Drug Administration controls the interstate sale of raw milk and cheeses made from raw milk. All of which brings us back to France, the home of both Camembert and pasteurization. Der Spiegel reports that one of France's largest cheese producers has just given up a long campaign, citing health concerns, to change the Camembert Charter to allow pasteurized milk to be used. But consumers and other producers successfully resisted, and it remains the case that no cheese made with pasteurized milk can be sold as le Camembert de Normandie.
I can't quite tell if this is brand protection, some other kind of protectionism, or if it is related to the kind of repugnance associated with the resistence to genetically modified crops in Europe. But it makes for a good story, and reflects some of the complexities of buying, selling, and labelling food.
Because raw milk can harbor disease causing bacteria, the costs of making cheese safely from raw milk is greater than from pasteurized milk. Because of health concerns, the U.S. Food and Drug Administration controls the interstate sale of raw milk and cheeses made from raw milk. All of which brings us back to France, the home of both Camembert and pasteurization. Der Spiegel reports that one of France's largest cheese producers has just given up a long campaign, citing health concerns, to change the Camembert Charter to allow pasteurized milk to be used. But consumers and other producers successfully resisted, and it remains the case that no cheese made with pasteurized milk can be sold as le Camembert de Normandie.
I can't quite tell if this is brand protection, some other kind of protectionism, or if it is related to the kind of repugnance associated with the resistence to genetically modified crops in Europe. But it makes for a good story, and reflects some of the complexities of buying, selling, and labelling food.
Assisted suicide, Right to Die
We say that a transaction that some people want to engage in is "repugnant" if other people don't want them to, and assisted suicide fits the bill; it remains a crime in most states. But the demand for dignified death by the terminally ill means that the issue raises its head time and again. The NY Times reports: 4 Charged in Multi-State Suicide Assistance Probe .
The organization in question in this case is the Final Exit Network, and the particular charge is that they offered advice and moral support to a terminally ill Georgia man.
"The Georgia man's mother, Betty Celmer, contended that the group shouldn't face charges if they helped her son.
''If they helped John to die, that is what he wanted. I would never find them guilty for helping him,'' she said. ''If someone helped him, I think that was in God's hands.''"
A quick search on the web reveals that the venerable Hemlock Society is no more, but that there remain non-profit organizations devoted to the idea of dignified death, its discussion, and to changing legislation on the subject: here is the website of the World Federation of Right to Die Societies.
The organization in question in this case is the Final Exit Network, and the particular charge is that they offered advice and moral support to a terminally ill Georgia man.
"The Georgia man's mother, Betty Celmer, contended that the group shouldn't face charges if they helped her son.
''If they helped John to die, that is what he wanted. I would never find them guilty for helping him,'' she said. ''If someone helped him, I think that was in God's hands.''"
A quick search on the web reveals that the venerable Hemlock Society is no more, but that there remain non-profit organizations devoted to the idea of dignified death, its discussion, and to changing legislation on the subject: here is the website of the World Federation of Right to Die Societies.
Wednesday, February 25, 2009
Kidney Exchange
Miller-McCune magazine has an article on kidney exchange that gives a pretty good view of some current developments (having to do with exchanges involving compatible as well as incompatible pairs, and chains of transplants started by non-directed donors): Making a Market for Kidneys.
"Using game theory and market-design software, doctors are arranging kidney-transplant "swaps" — sometimes in long chains — to give more people with renal disease better transplant options and healthier futures."
The story mentions both the New England Program for Kidney Exchange, and the Alliance for Paired Donation, the two innovative kidney exchange networks with which Tayfun Sonmez, Utku Unver and I have worked extensively. (One of my longstanding frustrations with the ways in which stories make it into the news, however, is that, while I am mentioned by name in the story, my colleagues are not. I invariably mention this frustration to reporters when they call, but often it doesn't help. It must say something about the market for news, although I'm not quite sure what.
"Using game theory and market-design software, doctors are arranging kidney-transplant "swaps" — sometimes in long chains — to give more people with renal disease better transplant options and healthier futures."
The story mentions both the New England Program for Kidney Exchange, and the Alliance for Paired Donation, the two innovative kidney exchange networks with which Tayfun Sonmez, Utku Unver and I have worked extensively. (One of my longstanding frustrations with the ways in which stories make it into the news, however, is that, while I am mentioned by name in the story, my colleagues are not. I invariably mention this frustration to reporters when they call, but often it doesn't help. It must say something about the market for news, although I'm not quite sure what.
Tuesday, February 24, 2009
Credit: not repugnant anymore
What a difference a few centuries can make. When Shakespeare wrote The Merchant of Venice, lending money was a repugnant transaction.
When President Obama spoke to Congress Tuesday evening, he had this to say: "You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education, how stores stock their shelves, farms buy equipment, and businesses make payroll."
When President Obama spoke to Congress Tuesday evening, he had this to say: "You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education, how stores stock their shelves, farms buy equipment, and businesses make payroll."
Market design is coming of age
There are an increasing number of signs that Market Design is coming of age as a distinct area of economics. Here are three.
The National Bureau of Economic Research has formed a new Market Design Working Group. Susan Athey and Parag Pathak have organized its first conference, for May 15-16, 2009. Here is the preliminary program.
My Market Design course at Harvard, which for many years used to stand alone, is this year part of a two-semester sequence, with the second semester being Economics 2056b. Topics in Market Design - (New Course) offered by my colleagues Susan Athey and Greg Lewis. More of our Ph.D. students are choosing market design as a field, and we've had some great graduates in the decade I've been at Harvard (all of whom do other things as well:), including Estelle Cantillon, Muriel Niederle, John Asker, Michael Ostrovsky , Ben Edelman, Parag Pathak, Fuhito Kojima, Robin Lee and (this year) Eric Budish and Mihai Manea.
Oxford University Press is preparing a Handbook of Market Design, edited by Nir Vulcan, Muriel Niederle , and Zvika Neeman.
The National Bureau of Economic Research has formed a new Market Design Working Group. Susan Athey and Parag Pathak have organized its first conference, for May 15-16, 2009. Here is the preliminary program.
My Market Design course at Harvard, which for many years used to stand alone, is this year part of a two-semester sequence, with the second semester being Economics 2056b. Topics in Market Design - (New Course) offered by my colleagues Susan Athey and Greg Lewis. More of our Ph.D. students are choosing market design as a field, and we've had some great graduates in the decade I've been at Harvard (all of whom do other things as well:), including Estelle Cantillon, Muriel Niederle, John Asker, Michael Ostrovsky , Ben Edelman, Parag Pathak, Fuhito Kojima, Robin Lee and (this year) Eric Budish and Mihai Manea.
Oxford University Press is preparing a Handbook of Market Design, edited by Nir Vulcan, Muriel Niederle , and Zvika Neeman.
Monday, February 23, 2009
Market design from the other side of the fence
Market design is both about designing markets (design as a verb) and about understanding the design of existing markets (design as a noun). This latter activity is the way game theorists originally got into the business; by looking at the existing 'rules of the game,' and figuring out how they worked, and could be made to work.
I'm reminded of this by two working papers on auctions, one focused on offering consulting advice to a bidder, and the other on criminal collusion among bidders.
The consulting story is by the A-team of spectrum auction consultants, and recounts some of their recent experience giving bidding advice: Winning Play in Spectrum Auctions by Jeremy Bulow, Jonathan Levin and Paul Milgrom. They focus on the information flows in multi-round auctions, and how the amounts bid in early rounds can help forecast final prices, which is an aid in deciding on which lots to bid:
"In major spectrum auctions, even large corporations need to raise or put aside money in advance to finance their spectrum purchases. Many of these companies also have a broad set of target licenses. If these licenses are substitutes and the budget constraint is binding, the bidder's optimal purchase will involve spending its whole budget or nearly so. Of course not every bidder falls into this category. For bidders with tight budgets and narrow interests, or for entrants with all-or-nothing goals, rising prices could lead them to spend zero once the prices of target licenses rise too high.
"If bidders in the first category account for enough of the money in the auction, a previously unexplored pattern becomes identifiable in the data. Define a bidder's exposure to be the sum of all of its bids in a given round, including its standing high bids from the prior round and all of its new bids in the current round, whether provisionally winning or not. This is the largest amount that a bidder might have to pay if all of its bids were to become winning. If a bidder faces a binding budget constraint and has broad interests, then as prices increase from round to round, its total exposure will eventually level off at an amount approximating its budget. If all bidders were to fall in this category, then the total exposure of all bidders in the auction would rise to the level of the aggregate bidder budgets and level off, forecasting the final auction prices. As prices rise, bidders will narrow the set of licenses on which they bid, the identities of the provisionally winning bidders on various licenses will change, and total winning bids will continue to rise, but final total winning bids will be forecast early and well by total exposure."
The account of criminal collusion is John Asker's A Study of the Internal Organisation of a Bidding Cartel, which tells of a long lived cartel of stamp dealers who agreed in advance which of their members would bid on each lot that they were collectively interested in. (He obtained the data from the prosecution records of the Antitrust Bureau of the New York Attorney General’s Department.) They coordinated among themselves by first holding a "knockout auction" (of roughly the kind that Graham, Marshall, and Richard 1990 described among bidders in New Jersey machine tool auctions), to determine which of the cartel members would be allocated the right to bid on each lot, and what sidepayments would be made following a successful bid. The detailed data allow Asker to estimate the costs that the cartel imposed on sellers and on other bidders who were not members of the cartel.
Sunday, February 22, 2009
Real estate auctions
Sales of property by auction seem to rise in bad times: Commercial Auctions Expected to Rise . The attraction of an auction is that it can aid in price discovery, and move quickly.
One such property "is the John Hancock Tower in Boston, which is set to go on the auction block next month. The dire turn of events came after Broadway Partners, based in New York, which bought the tower in 2006 for $1.3 billion, defaulted in January on some loans, prompting a group of mezzanine lenders to hire Green Loan Services, a unit of SL Green, to pursue an auction. (Mezzanine loans are secured by a stake in ownership rather than the actual property; they have become increasingly popular over the last several years of high-leverage deal making.)"
...
"Auction houses are poised for a growing role in commercial real estate. The strengths of the auction model — a faster sales cycle, lower costs, and the ability to quickly determine a fair market value — play into current market conditions.
“It’s tough to put your finger on a price right now,” said Randy Wells, the president of the National Auctioneers Association. He said that comparable sales and listings could be consulted “but it’s guesswork right now,” and that auctions “are really good at finding a current market value in a short amount of time.” "
One such property "is the John Hancock Tower in Boston, which is set to go on the auction block next month. The dire turn of events came after Broadway Partners, based in New York, which bought the tower in 2006 for $1.3 billion, defaulted in January on some loans, prompting a group of mezzanine lenders to hire Green Loan Services, a unit of SL Green, to pursue an auction. (Mezzanine loans are secured by a stake in ownership rather than the actual property; they have become increasingly popular over the last several years of high-leverage deal making.)"
...
"Auction houses are poised for a growing role in commercial real estate. The strengths of the auction model — a faster sales cycle, lower costs, and the ability to quickly determine a fair market value — play into current market conditions.
“It’s tough to put your finger on a price right now,” said Randy Wells, the president of the National Auctioneers Association. He said that comparable sales and listings could be consulted “but it’s guesswork right now,” and that auctions “are really good at finding a current market value in a short amount of time.” "
School choice in England, continued
School choice, a frequent subject on this blog, is a vexed question around the world. In Britain, the Telegraph reports, Children allocated school places on 'roll of a dice': Thousands of children must take part in random lotteries for school places in a Government attempt to break a middle-class stranglehold on the best schools.
"Schools in a quarter of council areas are allocating places by lottery or "fair banding" – in which the school uses test results to deliberately select a proportion of pupils of poor ability.
The move could cause difficulties for affluent families who have dominated successful schools by buying houses within their catchment areas, often paying a premium of tens of thousands of pounds.
Last year, Brighton became the first area to allocate places at all oversubscribed schools through lotteries after Government reforms gave councils and schools the power to do so. The policy is designed to make all state schools truly comprehensive by ensuring they contain pupils of mixed abilities and social backgrounds, rather than being dominated by those who can afford to live nearby."
It turns out that in New York City, where my colleagues and I helped design a high school choice system, some schools ("Educational Option Schools") also require that a full range of student abilities be represented.
"Schools in a quarter of council areas are allocating places by lottery or "fair banding" – in which the school uses test results to deliberately select a proportion of pupils of poor ability.
The move could cause difficulties for affluent families who have dominated successful schools by buying houses within their catchment areas, often paying a premium of tens of thousands of pounds.
Last year, Brighton became the first area to allocate places at all oversubscribed schools through lotteries after Government reforms gave councils and schools the power to do so. The policy is designed to make all state schools truly comprehensive by ensuring they contain pupils of mixed abilities and social backgrounds, rather than being dominated by those who can afford to live nearby."
It turns out that in New York City, where my colleagues and I helped design a high school choice system, some schools ("Educational Option Schools") also require that a full range of student abilities be represented.
Saturday, February 21, 2009
Friday, February 20, 2009
Market for scholars
Universities are a bit mysterious: they provide both private and public goods, and nations and regions therefore seek to have them. Universities involve the interchange of ideas, and one way to promote this is to promote the interchange of scholars. The European Union, which has long sought to make it easy for students from one EU nation to study in another, is now also investing in making it easy for students to travel more widely: European Union Puts $1.2-Billion Into International-Study Program.
"Students from outside the European Union will be able to tap into more than $1.2-billion in new scholarship money over the next five years through Erasmus Mundus, an academic-mobility program. "
...
"The Erasmus Mundus program is patterned on the 20-year-old Erasmus program, which encourages educational mobility within the European Union’s 27 member nations. Erasmus Mundus is intended to be competitive with the Fulbright program and to increase Europe’s attractiveness as a destination for foreign scholars. "
...
"The program will also provide more-generous grants for European students to study outside the European Union, Mr. Figel said, “making the two-way exchange of the world’s best students and academic staff a reality.”"
"Students from outside the European Union will be able to tap into more than $1.2-billion in new scholarship money over the next five years through Erasmus Mundus, an academic-mobility program. "
...
"The Erasmus Mundus program is patterned on the 20-year-old Erasmus program, which encourages educational mobility within the European Union’s 27 member nations. Erasmus Mundus is intended to be competitive with the Fulbright program and to increase Europe’s attractiveness as a destination for foreign scholars. "
...
"The program will also provide more-generous grants for European students to study outside the European Union, Mr. Figel said, “making the two-way exchange of the world’s best students and academic staff a reality.”"
Thursday, February 19, 2009
Online job search
The WSJ has two articles about congestion on online job search sites. The first reports that, not only is it hard for employers to sort through applicants, a growing number of advertised positions may be deceptive, duplicate, already-filled, or fraudulent: It Isn't Always a Job Behind an Online Job Posting: Employment Ads on the Web Can Lead You to Marketing Pitches, or Worse.
Online job seekers may be particularly susceptible to fraud, because they are willing to give out various kinds of personal information, etc.
An accompanying article asks various recruiting professionals for advice:
Experts Weigh In on Job Boards . Some quick quotes:
Re Monster, CareerBuilder and HotJobs "They do a nice job for very young, entry-level job hunters," says Michael Mellone, a senior consultant at ClearRock, a Boston-based outplacement firm. But for more experienced professionals, he says, industry-specific job sites such as efinancialcareers.com and HigherEd.com are more effective."
"For Mr. Crispin, Jobing.com wins high marks. The site specializes in advertising local employment for job hunters in 41 metro areas across the country. "They have people who physically go out and meet with professional associations that are trying to get their members hired," he says.
Mr. Crispin also favors the site for the DirectEmployers Association, jobcentral.com. Job hunters interested in positions advertised on the site can click on a link to be taken directly to the employer's Web site. "You apply to the company firsthand," he says."
"Rich Gee, an executive coach in Stamford, Conn., recommends Execunet.com. "It's a serious job site," he says. "You cut right through the noise and get to the actual job."
Q: Execunet charges a fee to respond to its help-wanted ads. So do TheLadders and some other job boards. Are they worth paying for?
A: "It's not a lot of money for what you get in return, which is a great filter to get to serious jobs," says Mr. Gee.
Ms. Hightower Hill says many job hunters she's worked with complain that too many employment ads on TheLadders are anonymous, making research and due diligence difficult. "It's pretty hard to follow up because you don't always know the identity of the company," she explains."
"Q: What advice do you have for job hunters searching employment boards?
A: Don't put too much time into them, advises Mr. Cohen. He recommends investing heavily in networking in person and online."
"Networking" isn't just a buzzword. In 1973, the eminent economic sociologist Mark Granovetter first documented the strength of weak ties, and the fact that many jobs are found through friends of friends. The idea is that your close friends have more or less the same information you do, so they may not know of any job openings that you don't already know of. But as you reach out to people to whom you are only more distantly connected, you gain access to new information.
In the years to come it will be interesting to learn whether online job search and other market-making activities change how most jobs are found.
Online job seekers may be particularly susceptible to fraud, because they are willing to give out various kinds of personal information, etc.
An accompanying article asks various recruiting professionals for advice:
Experts Weigh In on Job Boards . Some quick quotes:
Re Monster, CareerBuilder and HotJobs "They do a nice job for very young, entry-level job hunters," says Michael Mellone, a senior consultant at ClearRock, a Boston-based outplacement firm. But for more experienced professionals, he says, industry-specific job sites such as efinancialcareers.com and HigherEd.com are more effective."
"For Mr. Crispin, Jobing.com wins high marks. The site specializes in advertising local employment for job hunters in 41 metro areas across the country. "They have people who physically go out and meet with professional associations that are trying to get their members hired," he says.
Mr. Crispin also favors the site for the DirectEmployers Association, jobcentral.com. Job hunters interested in positions advertised on the site can click on a link to be taken directly to the employer's Web site. "You apply to the company firsthand," he says."
"Rich Gee, an executive coach in Stamford, Conn., recommends Execunet.com. "It's a serious job site," he says. "You cut right through the noise and get to the actual job."
Q: Execunet charges a fee to respond to its help-wanted ads. So do TheLadders and some other job boards. Are they worth paying for?
A: "It's not a lot of money for what you get in return, which is a great filter to get to serious jobs," says Mr. Gee.
Ms. Hightower Hill says many job hunters she's worked with complain that too many employment ads on TheLadders are anonymous, making research and due diligence difficult. "It's pretty hard to follow up because you don't always know the identity of the company," she explains."
"Q: What advice do you have for job hunters searching employment boards?
A: Don't put too much time into them, advises Mr. Cohen. He recommends investing heavily in networking in person and online."
"Networking" isn't just a buzzword. In 1973, the eminent economic sociologist Mark Granovetter first documented the strength of weak ties, and the fact that many jobs are found through friends of friends. The idea is that your close friends have more or less the same information you do, so they may not know of any job openings that you don't already know of. But as you reach out to people to whom you are only more distantly connected, you gain access to new information.
In the years to come it will be interesting to learn whether online job search and other market-making activities change how most jobs are found.
Wednesday, February 18, 2009
Industry standards: cell phone chargers
One way to increase the market for a technology is to make it more commodity like, by adopting an industry standard. So it is very welcome news that Universal cell phone chargers are coming 'soon'.
"On Tuesday, the GSMA trade association announced at its 2009 Mobile World Congress here that it has brokered a deal with the world's leading handset makers to come up with a standard for charging cell phones.
All the major handset makers, including, LG, Motorola, Nokia, Samsung, and Sony Ericsson, have agreed to use the Micro-USB technology as the common universal charging interface, Rob Conway, GSMA CEO, said during the opening keynote speech Tuesday. By 2012, the GSMA promises, most cell phones will use the same kind of connector to charge their batteries.
Seventeen mobile operators, including Vodafone, Orange, and Telofonic, announced they are committed to implementing the standard for the universal mobile phone charger. "
"On Tuesday, the GSMA trade association announced at its 2009 Mobile World Congress here that it has brokered a deal with the world's leading handset makers to come up with a standard for charging cell phones.
All the major handset makers, including, LG, Motorola, Nokia, Samsung, and Sony Ericsson, have agreed to use the Micro-USB technology as the common universal charging interface, Rob Conway, GSMA CEO, said during the opening keynote speech Tuesday. By 2012, the GSMA promises, most cell phones will use the same kind of connector to charge their batteries.
Seventeen mobile operators, including Vodafone, Orange, and Telofonic, announced they are committed to implementing the standard for the universal mobile phone charger. "
Tuesday, February 17, 2009
Economics of Contracts
The Institute for Advanced Study at the Hebrew University of Jerusalem will hold its 20th annual Economics summer school this year from June 19-30, on the Economics of Contracts. The faculty is awesome: Philippe Aghion (Harvard), Omri Ben-Shahar (Chicago), Mathias Dewatripont (Brussels), Oliver Hart (Harvard), Bengt Holmstrom (MIT), Eric Maskin (IAS Princeton), and Jean Tirole (Toulouse).
Send your students...
Send your students...
Market for nurses: residencies?
Despite the medical-training ethos of "see one, do one, teach one," newly graduated MD's aren't considered to be independent doctors until they have completed several years of organized on the job training (in the form of residencies and fellowships). Nurses, however, are often thrust directly into relatively unsupervised patient care directly upon graduation.
That may be changing, partly because the stress of being given too much responsibility too soon causes young nurses to leave: Amid Nurse Shortage, Hospitals Focus on Retention.
"Many novice nurses like O'Bryan are thrown into hospitals with little direct supervision, quickly forced to juggle multiple patients and make critical decisions for the first time in their careers. About 1 in 5 newly licensed nurses quits within a year, according to one national study.
That turnover rate is a major contributor to the nation's growing shortage of nurses. But there are expanding efforts to give new nursing grads better support. Many hospitals are trying to create safety nets with residency training programs."
...
"One national program is the Versant RN Residency, which was developed at Childrens Hospital Los Angeles and since 2004 has spread to 70 other hospitals nationwide. One of those, Baptist Health South Florida in the Miami area, reports cutting its turnover rate from 22 percent to 10 percent in the 18 months since it started its program."
...
"The American Association of Colleges of Nursing and the University HealthSystem Consortium teamed up in 2002 to create a residency primarily for hospitals affiliated with universities. Fifty-two sites now participate in that yearlong program and the average turnover rate for new nurses was about 6 percent in 2007."
...
"The National Council of State Boards of Nursing is considering a standardized transition program. It cited a study showing a link between residencies and fewer medical errors, but also pointed to the inconsistency among current efforts."
That may be changing, partly because the stress of being given too much responsibility too soon causes young nurses to leave: Amid Nurse Shortage, Hospitals Focus on Retention.
"Many novice nurses like O'Bryan are thrown into hospitals with little direct supervision, quickly forced to juggle multiple patients and make critical decisions for the first time in their careers. About 1 in 5 newly licensed nurses quits within a year, according to one national study.
That turnover rate is a major contributor to the nation's growing shortage of nurses. But there are expanding efforts to give new nursing grads better support. Many hospitals are trying to create safety nets with residency training programs."
...
"One national program is the Versant RN Residency, which was developed at Childrens Hospital Los Angeles and since 2004 has spread to 70 other hospitals nationwide. One of those, Baptist Health South Florida in the Miami area, reports cutting its turnover rate from 22 percent to 10 percent in the 18 months since it started its program."
...
"The American Association of Colleges of Nursing and the University HealthSystem Consortium teamed up in 2002 to create a residency primarily for hospitals affiliated with universities. Fifty-two sites now participate in that yearlong program and the average turnover rate for new nurses was about 6 percent in 2007."
...
"The National Council of State Boards of Nursing is considering a standardized transition program. It cited a study showing a link between residencies and fewer medical errors, but also pointed to the inconsistency among current efforts."
Monday, February 16, 2009
Sustainable fisheries
Nowhere is the "tragedy of the commons" clearer than in ocean fisheries, which are difficult to regulate and maintain in a sustainable way. A recent article, Fish Shares and Sharing Fish describes the problem well. (From a market design perspective, one difficulty is that fishermen have large strategy sets, so changing the rules of the game often changes behavior in unanticipated ways.)
In national waters, regulations involve law enforcement, and the Washington Post has an illuminating story about a criminal investigation involving the sale of illegally large rockfish (striped bass), which the law requires must be thrown back so that the breeding pool should not be selected to consist of only small fish. Swimming in Intrigue in Backwoods of Md.: Four-Year Undercover Probe Led to Charges of Rockfish Trafficking.
Some quick quotes from that story:
"Cheating is an old vice around the Chesapeake, with watermen sneaking in extra bushels of oysters or undersized perch. "
"The fish -- a key predator and a beloved sport fish, also known as striped bass -- has rebounded from desperate lows in the 1980s, in part because of restrictions on fishing."
"Many of the fish were tagged as having been caught with hooks and lines, but the agents suspected they had actually been caught in a large net and should have been subject to different restrictions.
To prove it, they turned to a fish coroner. "
In October 2007 I hosted a conference at Harvard organized by Ecotrust on Market Design for Limited Access Programs in U.S. Fisheries. One consequence of that is that, together with some students and colleagues, I occasionally get to talk to Paul Parker of the Cape Cod Fisheries Trust, about contemporary market design problems in the Cape Cod scallop and ground fish fisheries. His concern is with how regulations on fishing may impact the composition of the fishing fleet; and how the makeup of the fleet (specifically the relationship between big factory ships and the small day boats that are the constituency of the Cape Cod Commercial Hook Fishermen's Association) will in turn impact the fish.
In national waters, regulations involve law enforcement, and the Washington Post has an illuminating story about a criminal investigation involving the sale of illegally large rockfish (striped bass), which the law requires must be thrown back so that the breeding pool should not be selected to consist of only small fish. Swimming in Intrigue in Backwoods of Md.: Four-Year Undercover Probe Led to Charges of Rockfish Trafficking.
Some quick quotes from that story:
"Cheating is an old vice around the Chesapeake, with watermen sneaking in extra bushels of oysters or undersized perch. "
"The fish -- a key predator and a beloved sport fish, also known as striped bass -- has rebounded from desperate lows in the 1980s, in part because of restrictions on fishing."
"Many of the fish were tagged as having been caught with hooks and lines, but the agents suspected they had actually been caught in a large net and should have been subject to different restrictions.
To prove it, they turned to a fish coroner. "
In October 2007 I hosted a conference at Harvard organized by Ecotrust on Market Design for Limited Access Programs in U.S. Fisheries. One consequence of that is that, together with some students and colleagues, I occasionally get to talk to Paul Parker of the Cape Cod Fisheries Trust, about contemporary market design problems in the Cape Cod scallop and ground fish fisheries. His concern is with how regulations on fishing may impact the composition of the fishing fleet; and how the makeup of the fleet (specifically the relationship between big factory ships and the small day boats that are the constituency of the Cape Cod Commercial Hook Fishermen's Association) will in turn impact the fish.
Sunday, February 15, 2009
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. "
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. "
Saturday, February 14, 2009
Contracts for basketball players: the principal-agent problem in a team sport
The NY Times has a fascinating article on basketball, focused on the Rockets' Shane Battier: The No-Stats All-Star. But the larger focus of the article is on basketball as a team sport in which there is considerable tension between self interest and team interest for players who are measured and rewarded by their individual statistics. That is, players may be tempted to shoot rather than pass, or vice versa, in order to improve their statistics even when a different action would have a greater chance of improving the score, and many of the important defensive things a player like Battier does are not even measured by conventionally reported statistics. The article suggests that basketball contracts may change, as teams start to understand incentives better.
"There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group. On the baseball field, it would be hard for a player to sacrifice his team’s interest for his own. Baseball is an individual sport masquerading as a team one: by doing what’s best for himself, the player nearly always also does what is best for his team. “There is no way to selfishly get across home plate,” as Morey puts it. “If instead of there being a lineup, I could muscle my way to the plate and hit every single time and damage the efficiency of the team — that would be the analogy"
...
"When I ask Morey if he can think of any basketball statistic that can’t benefit a player at the expense of his team, he has to think hard. “Offensive rebounding,” he says, then reverses himself. “But even that can be counterproductive to the team if your job is to get back on defense.” It turns out there is no statistic that a basketball player accumulates that cannot be amassed selfishly. “We think about this deeply whenever we’re talking about contractual incentives,” he says. “We don’t want to incent a guy to do things that hurt the team” — and the amazing thing about basketball is how easy this is to do. “They all maximize what they think they’re being paid for,” he says. He laughs. “It’s a tough environment for a player now because you have a lot of teams starting to think differently. They’ve got to rethink how they’re getting paid.”"
The principal-agent problem is everywhere.
"There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group. On the baseball field, it would be hard for a player to sacrifice his team’s interest for his own. Baseball is an individual sport masquerading as a team one: by doing what’s best for himself, the player nearly always also does what is best for his team. “There is no way to selfishly get across home plate,” as Morey puts it. “If instead of there being a lineup, I could muscle my way to the plate and hit every single time and damage the efficiency of the team — that would be the analogy"
...
"When I ask Morey if he can think of any basketball statistic that can’t benefit a player at the expense of his team, he has to think hard. “Offensive rebounding,” he says, then reverses himself. “But even that can be counterproductive to the team if your job is to get back on defense.” It turns out there is no statistic that a basketball player accumulates that cannot be amassed selfishly. “We think about this deeply whenever we’re talking about contractual incentives,” he says. “We don’t want to incent a guy to do things that hurt the team” — and the amazing thing about basketball is how easy this is to do. “They all maximize what they think they’re being paid for,” he says. He laughs. “It’s a tough environment for a player now because you have a lot of teams starting to think differently. They’ve got to rethink how they’re getting paid.”"
The principal-agent problem is everywhere.
TARP II
Lucian Bebchuk, the eminent law-and-economics lawyer/economist best known for his work on corporate governance, has just distributed a paper, How To Make TARP II Work.
Here is the Abstract:
"Treasury Secretary Geithner announced a plan, which the Treasury is willing to finance with up to $1 trillion of public funds, to partner with private capital to buy banks' "troubled assets." The Treasury has not yet settled on the plan's design, and its announcement has encountered substantial skepticism as to whether an effective plan for a public-private partnership in buying troubled assets can be worked out. This paper argues that, yes, it can. The paper also analyzes how the plan should be designed to contribute most to restarting the market for troubled assets at the least cost to taxpayers.
"The government's plan should focus on establishing a significant number of competing funds that will be privately managed and dedicated to buying troubled assets - not on creating one, large public-private aggregator bank. Establishing competing funds, I show, is necessary both to securing a well-functioning market for troubled assets and to keeping costs to taxpayers at a minimum.
"Each new fund will be partly financed with private capital, with the rest coming (say, in the form of non-recourse debt financing) from the government's Investment Fund planned by the Treasury. One important element of the proposed design is a competitive process in which private managers seeking to establish a fund participating in the program will submit bids as to what fraction of the fund's capital will be funded privately. The government will set the fraction of each participating fund's capital that must be financed with private money at the highest level that, given the received bids, will still enable establishing new funds with aggregate capital equal to the program's target level. Overall, I show that the proposed design will leverage private capital to the fullest extent possible and will provide the most effective and least costly mechanism for restarting the market for troubled assets. "
Here is the Abstract:
"Treasury Secretary Geithner announced a plan, which the Treasury is willing to finance with up to $1 trillion of public funds, to partner with private capital to buy banks' "troubled assets." The Treasury has not yet settled on the plan's design, and its announcement has encountered substantial skepticism as to whether an effective plan for a public-private partnership in buying troubled assets can be worked out. This paper argues that, yes, it can. The paper also analyzes how the plan should be designed to contribute most to restarting the market for troubled assets at the least cost to taxpayers.
"The government's plan should focus on establishing a significant number of competing funds that will be privately managed and dedicated to buying troubled assets - not on creating one, large public-private aggregator bank. Establishing competing funds, I show, is necessary both to securing a well-functioning market for troubled assets and to keeping costs to taxpayers at a minimum.
"Each new fund will be partly financed with private capital, with the rest coming (say, in the form of non-recourse debt financing) from the government's Investment Fund planned by the Treasury. One important element of the proposed design is a competitive process in which private managers seeking to establish a fund participating in the program will submit bids as to what fraction of the fund's capital will be funded privately. The government will set the fraction of each participating fund's capital that must be financed with private money at the highest level that, given the received bids, will still enable establishing new funds with aggregate capital equal to the program's target level. Overall, I show that the proposed design will leverage private capital to the fullest extent possible and will provide the most effective and least costly mechanism for restarting the market for troubled assets. "
Friday, February 13, 2009
Pirate ransom: counterparty risk in the endgame
The NY Times reports that Hijacked Arms Ship Limps Into Port (this is the Ukranian ship full of Russian tanks and other heavy weapons that I blogged about earlier).
An earlier report, Somali Pirates Said to Be Leaving Ship , sheds some light on the negotiations:
"Somali pirates freed a Ukrainian ship carrying tanks and other heavy weapons Thursday after receiving a $3.2 million ransom. The U.S. Navy watched the pirates go but didn't act because the pirates still hold almost 150 people from other crews hostage." ...
"U.S. seamen were inspecting the pirates' departing boats to make sure they weren't taking weapons from the Faina's cargo, Mikhail Voitenko, a spokesman for the ship's owners, said Thursday.
But the Navy was not taking action against the pirates because it did not want members of other crews still in captivity to be harmed, said Cmdr. Jane Campbell, a spokeswoman for the 5th Fleet in Bahrain.
''Even when you release Faina, there are still 147 mariners held hostage by armed pirates,'' Campbell told The Associated Press. ''We're concerned for their well-being.''"
This is the same U.S. Navy one of whose first missions was to fight the Barbary Pirates , an earlier African/Islamic manifestation of piracy. (Do you say a Navy won its wings? spurs? water wings?). So it is very plausible that the pirates worry that, when they release their last hostages, they will face military retaliation against their bases in Somalia.
This will make the endgame tricky.
An earlier report, Somali Pirates Said to Be Leaving Ship , sheds some light on the negotiations:
"Somali pirates freed a Ukrainian ship carrying tanks and other heavy weapons Thursday after receiving a $3.2 million ransom. The U.S. Navy watched the pirates go but didn't act because the pirates still hold almost 150 people from other crews hostage." ...
"U.S. seamen were inspecting the pirates' departing boats to make sure they weren't taking weapons from the Faina's cargo, Mikhail Voitenko, a spokesman for the ship's owners, said Thursday.
But the Navy was not taking action against the pirates because it did not want members of other crews still in captivity to be harmed, said Cmdr. Jane Campbell, a spokeswoman for the 5th Fleet in Bahrain.
''Even when you release Faina, there are still 147 mariners held hostage by armed pirates,'' Campbell told The Associated Press. ''We're concerned for their well-being.''"
This is the same U.S. Navy one of whose first missions was to fight the Barbary Pirates , an earlier African/Islamic manifestation of piracy. (Do you say a Navy won its wings? spurs? water wings?). So it is very plausible that the pirates worry that, when they release their last hostages, they will face military retaliation against their bases in Somalia.
This will make the endgame tricky.
Thursday, February 12, 2009
Auction design for football games
One of Tim Harford's excellent recent columns is on market design for professional football games: Why the NFL should replace the overtime coin toss with an auction system. The issue is that, when a game goes to sudden death overtime, the winner of the coin toss more often also wins the game.
"An ... elegant solution to the overtime problem was proposed in 2002 by Chris Quanbeck, an electrical engineer (and Green Bay Packers fan). Quanbeck's idea was to auction off possession of the ball in the natural currency of the game: field position. The team that was willing to begin closest to its own goal line would receive the privilege of possession."
...
"One person who did notice the Quanbeck proposal was Columbia University economist Yeon-Koo Che, a leading light in the theory and practice of auction design. Che wrote not to the NFL but to the economics journals and proved that "divide and choose" was much fairer to the loser of the toss than the current system. But what interested Che and co-author Terrence Hendershott was whether an auction might be even fairer than "divide and choose." They concluded that it would be, because the auction is completely symmetric—unlike with the "divide and choose" method, neither coach is forced to make the first move, so nobody has a built-in advantage. For Che and Hendershott, then, "divide and choose" partly solves the coin-toss problem; the auction fixes it completely."
Che and Hendershott write elsewhere (in The Economist's Voice)
" As far as we are concerned, this little thought experiment was a pleasant reprieve from the current economic woes, and it is nice that economics can have useful things to say on such an unlikely subject matter (a sport we both love), but as one hate email we received suggests, we should and will now “stick to bean counting.” "
I certainly hope they won't: there are plenty of bean counters, but talented market designers are rare.
HT Parag Pathak
"An ... elegant solution to the overtime problem was proposed in 2002 by Chris Quanbeck, an electrical engineer (and Green Bay Packers fan). Quanbeck's idea was to auction off possession of the ball in the natural currency of the game: field position. The team that was willing to begin closest to its own goal line would receive the privilege of possession."
...
"One person who did notice the Quanbeck proposal was Columbia University economist Yeon-Koo Che, a leading light in the theory and practice of auction design. Che wrote not to the NFL but to the economics journals and proved that "divide and choose" was much fairer to the loser of the toss than the current system. But what interested Che and co-author Terrence Hendershott was whether an auction might be even fairer than "divide and choose." They concluded that it would be, because the auction is completely symmetric—unlike with the "divide and choose" method, neither coach is forced to make the first move, so nobody has a built-in advantage. For Che and Hendershott, then, "divide and choose" partly solves the coin-toss problem; the auction fixes it completely."
Che and Hendershott write elsewhere (in The Economist's Voice)
" As far as we are concerned, this little thought experiment was a pleasant reprieve from the current economic woes, and it is nice that economics can have useful things to say on such an unlikely subject matter (a sport we both love), but as one hate email we received suggests, we should and will now “stick to bean counting.” "
I certainly hope they won't: there are plenty of bean counters, but talented market designers are rare.
HT Parag Pathak
Wednesday, February 11, 2009
Kidney Exchange coming to Spain (and liver exchange in HK)
Spain, which has the highest per-capita recovery rate of deceased donor organs in the world, is looking to expand its capacity for live donor kidney transplantation, by starting to use kidney exchange. Adn.es reports: España hará un trasplante cruzado de riñón.
"The first cross-kidney donation done in Spain will take place between two couples in June. "
HT to Flip Klijn
Update: for those who didn't click on the wonderful comment, here it is:
denisec said...
The first liver exchange in Hong Kong occurred a few weeks ago. It was described as "heaven sent" in the media: I save your hubby, you save my brother-in-law , and here it is (with a photo) in a Chinese newspaper
"The first cross-kidney donation done in Spain will take place between two couples in June. "
HT to Flip Klijn
Update: for those who didn't click on the wonderful comment, here it is:
denisec said...
The first liver exchange in Hong Kong occurred a few weeks ago. It was described as "heaven sent" in the media: I save your hubby, you save my brother-in-law , and here it is (with a photo) in a Chinese newspaper
Further Update, June 2023: the above links didn't survive the passage of more than a decade, but you can get a little closer to the Hong Kong story at this Singapore link
Market for health care: no law of one price
The Boston Globe ran a story about healthcare costs at different Boston area hospitals, in which fees are negotiated between insurers and individual hospitals: A healthcare system badly out of balance
""The same service delivered the same way with the same outcome can vary in cost from one provider to the next by as much as 300 percent," said Charles Baker, president of the state's second-largest health insurer, Harvard Pilgrim Health Care. "There is no other sector of the economy anywhere in this country in which that kind of price variability with no appreciable difference in service or product quality can sustain itself over time.""
Pricing certainly serves different function in health care than in other parts of the economy, and tertiary care teaching hospitals do more than provide simple patient services (e.g. they also train future docs, about which see my previous post today, on Orthopaedic surgeons). So, as the healthcare system is brought into better balance, some attention will have to be paid to paying for some of the things that now may be paid for with hidden cross-subsidies.
HT Paul Kominers (younger brother of the remarkable if less cool SK)
""The same service delivered the same way with the same outcome can vary in cost from one provider to the next by as much as 300 percent," said Charles Baker, president of the state's second-largest health insurer, Harvard Pilgrim Health Care. "There is no other sector of the economy anywhere in this country in which that kind of price variability with no appreciable difference in service or product quality can sustain itself over time.""
Pricing certainly serves different function in health care than in other parts of the economy, and tertiary care teaching hospitals do more than provide simple patient services (e.g. they also train future docs, about which see my previous post today, on Orthopaedic surgeons). So, as the healthcare system is brought into better balance, some attention will have to be paid to paying for some of the things that now may be paid for with hidden cross-subsidies.
HT Paul Kominers (younger brother of the remarkable if less cool SK)
Market for Orthopaedic surgeons
I recently broke an ankle in Maastricht and flew home for surgery in Boston. In both places I visited the emergency room. In both cases the orthopaedic surgery resident who I was treated by in the ER was a young woman.
In Boston, I remarked that, when I was much younger, orthopaedic surgeons were almost all men, and that back then they claimed that orthopaedic surgery had a lot in common with carpentry, and required significant upper body strength. The resident told me that the situation had indeed changed, she had senior mentors who were women.
When she and her colleagues apply for subspecialty fellowships, they will face not only a more gender-integrated market but also a much more orderly market than in the recent past.
A "match" (a centralized clearinghouse) is coming for Orthopaedic surgery subspecialties--see the following preparatory study by two economists (Muriel Niederle and myself) and seven surgeons. (As it happens--small world--the surgeon who put in the many new titanium parts I now am growing new bone around had heard me give an Orthopaedic Surgery Grand Rounds on this subject.)
Harner, Christopher D., Anil S. Ranawat, Muriel Niederle, Alvin E. Roth, Peter J. Stern, Shepard R. Hurwitz, William Levine, G. Paul DeRosa, Serena S. Hu, "Current State of Fellowship Hiring: Is a universal match necessary? Is it possible?," Journal of Bone and Joint Surgery, 90, 2008,1375-1384.
In Boston, I remarked that, when I was much younger, orthopaedic surgeons were almost all men, and that back then they claimed that orthopaedic surgery had a lot in common with carpentry, and required significant upper body strength. The resident told me that the situation had indeed changed, she had senior mentors who were women.
When she and her colleagues apply for subspecialty fellowships, they will face not only a more gender-integrated market but also a much more orderly market than in the recent past.
A "match" (a centralized clearinghouse) is coming for Orthopaedic surgery subspecialties--see the following preparatory study by two economists (Muriel Niederle and myself) and seven surgeons. (As it happens--small world--the surgeon who put in the many new titanium parts I now am growing new bone around had heard me give an Orthopaedic Surgery Grand Rounds on this subject.)
Harner, Christopher D., Anil S. Ranawat, Muriel Niederle, Alvin E. Roth, Peter J. Stern, Shepard R. Hurwitz, William Levine, G. Paul DeRosa, Serena S. Hu, "Current State of Fellowship Hiring: Is a universal match necessary? Is it possible?," Journal of Bone and Joint Surgery, 90, 2008,1375-1384.
Monday, February 9, 2009
Market for electric cars
Before there's a very big market for all-electric cars, there would have to be a way to take long trips in them. For gas-powered cars, there's an extensive infrastructure of filling stations around the world's network of roadways. The NY Times reports on one company's plans to initiate such a network of stations, where you could change your depleted battery for a full one: Mapping a Global Plan for Car Charging Stations
"Mr. Agassi said the first 50 stations would be built in Israel by the end of 2010, the same time Renault’s electric cars would be introduced there, and followed by installations in Denmark, Hawaii and elsewhere. "
Israel and Hawaii seem like natural places to get electric cars started. Both of them are islands as far as auto traffic is concerned: very few people drive out of either one of them. So it should be possible to serve all the driving needs with a small, dense network. Denmark will be harder, since although many car trips that begin in Denmark remain in Denmark, Danes also can drive to Germany and Sweden, and from there on to the wide world, so a Dane with an electric car would, at least for a while, be more limited than one with a gas-powered car.
"Mr. Agassi said the first 50 stations would be built in Israel by the end of 2010, the same time Renault’s electric cars would be introduced there, and followed by installations in Denmark, Hawaii and elsewhere. "
Israel and Hawaii seem like natural places to get electric cars started. Both of them are islands as far as auto traffic is concerned: very few people drive out of either one of them. So it should be possible to serve all the driving needs with a small, dense network. Denmark will be harder, since although many car trips that begin in Denmark remain in Denmark, Danes also can drive to Germany and Sweden, and from there on to the wide world, so a Dane with an electric car would, at least for a while, be more limited than one with a gas-powered car.
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