College admissions in China

Yan Chen and Onur Kesten have a new version of their paper on school choice mechanisms, inspired by the Chinese college admissions experiencewith what they call the "parallel mechanism": From Boston to Chinese Parallel to Deferred Acceptance: Theory and Experiments on a Family of School Choice Mechanisms

Abstract: We characterize a parametric family of application-rejection school choice mechanisms,
including the Boston and Deferred Acceptance mechanisms as special cases, and spanning the parallel mechanisms for Chinese college admissions, the largest centralized matching in the world. Moving from one extreme member to the other results in systematic changes in manipulability, stability and welfare properties. Neither the ex-post dominance of the DA over the Boston equilibria, nor the ex-ante dominance of the Boston equilibria over the DA in stylized settings extends to the parallel mechanisms. In the laboratory, participants are most likely to reveal their preferences truthfully under the DA mechanism, followed by the Chinese parallel and then the Boston mechanisms. Furthermore, while the DA is significantly more stable than the Chinese parallel mechanism, which is more stable than Boston, efficiency comparisons vary across environments."

The paper focuses on what they call the parallel mechanism, which falls between the Boston "immediate acceptance" and the Gale-Shapley "deferred acceptance" algorithms:

"While the sequential mechanism used to be the only mechanism used in CCA prior to 2003, to alleviate the problem of high-scoring students not accepted by any universities and the pressure to manipulate preference rankings under the sequential mechanism, the parallel mechanism has been adopted by 22 provinces by 2012. In the parallel mechanism, students can place several “parallel” colleges for each choice. For example, a student’s first choice can contain four colleges, A, B, C and D, in decreasing desirability. Colleges consider student applications, where allocations among the parallel colleges are temporary until a student is rejected from all the parallel colleges he has listed. Thus, this mechanism lies between the Boston mechanism, where every step is final, and the DA, where every step is temporary until all seats are filled. [An alternative interpretation of the parallel mechanism is that it approximates serial dictatorship with tiers (Wei 2009). Note, however, in the college admissions context when colleges have identical preferences, serial dictatorship and DA are equivalent.]"
...
"Transitioning from sequential to the parallel mechanisms, five provinces7 have adopted a hybrid between the sequential and parallel mechanisms, called the partial parallel mechanism. In Beijing, for example, a student can list one college as her first choice which retains the sequential nature, but three parallel colleges as her second choice. While variants of the parallel (and the partial parallel) mechanisms, each of which differs in the number of parallel choices, have been implemented in different provinces, to our knowledge, they have not been systematically studied theoretically or tested in the laboratory. In particular, when the number of parallel choices varies, how do manipulation incentives, allocation efficiency and stability change? In this paper, we investigate this question both theoretically and experimentally. We call the entire class of parallel (and partial parallel) mechanisms the Chinese parallel mechanisms, the simplest member of this class the Shanghai mechanism.
To study the performance of the different mechanisms more formally, we first provide a theoretical analysis and present a parametric family of application-rejection mechanisms where each member is characterized by some positive number e in{1,2,...}of parallel and periodic choices through which the application and rejection process continues before assignments are finalized.
As parameter e varies, we go from the familiar Boston mechanism (e = 1) to the Chinese parallel mechanisms (e in { 2,...}), and from those to the DA (e = infinity)."

The price of lunch for a good cause...we could do it by skype...on eBay today

Here's the eBay auction that will determine who I have lunch with at some future date.
I'll be checking on it this evening, to find out my price. (Right now I look like a bargain.)
It's  a fund raiser for Jewish Family Services of Silicon Valley.
It's a good cause, so if you are in the area, think of a lunch in person. And if you are somewhere else, I'd be happy to arrange a lunch for an hour or so over skype at some mutually convenient time (you could be eating dinner while I eat breakfast...)

Here's part of the eBay description (which may be why I'm going at a bargain price:)
"When asked to be one of the celebrities for the JFS “Lunch With…” auction, Roth wrote “you should put up a warning to bidders that I’m not the kind of economist who can predict the future course of the economy, or even explain the financial crisis or the euro situation…” 

Dating is so 20th century (and how about marriage?)

Two recent articles on online dating sites both think that internet dating is changing courtship and marriage, by making it too easy to meet people.

The NY Times focuses on dating culture, and suggests that internet communication itself may remove some of the signaling that used to take place when dating was more formal, and the fact that multiple people can be dated contemporaneously may work to reduce investment in each date:  The End of Courtship?


"Traditional courtship — picking up the telephone and asking someone on a date — required courage, strategic planning and a considerable investment of ego (by telephone, rejection stings). Not so with texting, e-mail, Twitter or other forms of “asynchronous communication,” as techies call it. In the context of dating, it removes much of the need for charm; it’s more like dropping a line in the water and hoping for a nibble.

“I’ve seen men put more effort into finding a movie to watch on Netflix Instant than composing a coherent message to ask a woman out,” said Anna Goldfarb, 34, an author and blogger in Moorestown, N.J. A typical, annoying query is the last-minute: “Is anything fun going on tonight?” More annoying still are the men who simply ping, “Hey” or “ ’sup.”

...
"Online dating services, which have gained mainstream acceptance, reinforce the hyper-casual approach by greatly expanding the number of potential dates. Faced with a never-ending stream of singles to choose from, many feel a sense of “FOMO” (fear of missing out), so they opt for a speed-dating approach — cycle through lots of suitors quickly.

"That also means that suitors need to keep dates cheap and casual. A fancy dinner? You’re lucky to get a drink.

“It’s like online job applications, you can target many people simultaneously — it’s like darts on a dart board, eventually one will stick,” said Joshua Sky, 26, a branding coordinator in Manhattan, describing the attitudes of many singles in their 20s. The mass-mailer approach necessitates “cost-cutting, going to bars, meeting for coffee the first time,” he added, “because you only want to invest in a mate you’re going to get more out of.”
...
"THERE’S another reason Web-enabled singles are rendering traditional dates obsolete. If the purpose of the first date was to learn about someone’s background, education, politics and cultural tastes, Google and Facebook have taken care of that."
********************

Meanwhile, in The Atlantic, the concern is that as it becomes easier to meet people, the incentive to work to maintain existing relationships may be diluted: A Million First Dates--How online romance is threatening monogamy

"The positive aspects of online dating are clear: the Internet makes it easier for single people to meet other single people with whom they might be compatible, raising the bar for what they consider a good relationship. But what if online dating makes it too easy to meet someone new? What if it raises the bar for a good relationship too high? What if the prospect of finding an ever-more-compatible mate with the click of a mouse means a future of relationship instability, in which we keep chasing the elusive rabbit around the dating track?"

Repugnant organization of academic journals?

A new mathematics journal is raising questions about whether it might be promoting repugnant transactions. Timothy Gowers, one of the editors of Forum of Mathematics, CUP’s new open-access journal has a blog post called Why I've joined the bad guys, in which he discusses the fact that the journal will fund itself by charging the authors of articles.

He begins as follows:

"If you are not already familiar with this debate, the aspect of Forum of Mathematics that many people dislike is that it will be funded by means of article processing charges (which I shall abbreviate to APCs) rather than subscriptions. For the next three years, these charges will be waived, but after that there will be a charge of £500 per article. Let me now consider a number of objections that people have to APCs.

"It is just plain wrong to ask authors to pay to get their articles published.
There are many variants of this argument. For instance, an analogy is often drawn with vanity publishing: do we want vanity publishing for mathematical articles?

"Let me begin with the “it is just plain wrong” part. A number of people have said that they find APCs morally repugnant. However, that on its own is not an argument. "


HT: Will Dearden

Women soldiers in combat

The road to a top job in the American armed forces lies in the combat branches, and soldiers can be forgiven for wanting combat experience. Women soldiers (and sailors and airmen? Is there a gender neutral word for soldiers in the Air Force?) are no exception, but have been excluded from "combat" assignments. (Of course, particularly in anti-insurgent and anti-terrorist warfare, where there are no front lines, women soldiers have increasingly often been thrust into combat.)

It appears that this is another repugnance that is fading away (not without opposition): Formally Lifting a Combat Ban, Military Chiefs Stress Equal Opportunity

"WASHINGTON — Defense Secretary Leon E. Panetta and Gen. Martin E. Dempsey, the chairman of the Joint Chiefs of Staff, on Thursday formally lifted the military’s ban on women in combat, saying that not every woman would become a combat soldier but that every woman deserved the chance to try.
...
"In the most vocal official opposition to the changes, Senator James M. Inhofe of Oklahoma, who is set to become the senior Republican on the Armed Services Committee, warned that some in Congress may seek legislation to limit the combat jobs open to women.

“I want everyone to know that the Senate Armed Services Committee, of which I am the ranking member, will have a period to provide oversight and review,” Mr. Inhofe said in a statement. “During that time, if necessary, we will be able to introduce legislation to stop any changes we believe to be detrimental to our fighting forces and their capabilities. I suspect there will be cases where legislation becomes necessary.”

"Pentagon officials said that the different services would have until May 15 to submit their plans for carrying out the new policy, but that the military wanted to move as quickly as possible to open up combat positions to women. Military officials said that there were more than 200,000 jobs now potentially open to women in specialties like infantry, armor, artillery and elite Special Operations commando units like the Navy SEALs and Army Rangers.

"If a service determines that a specialty should not be open to women, Pentagon officials said that representatives of the service would have to make the case to the defense secretary by January 2016."

Tim Harford talks about kidney transplants and kidney exchange

Tim Harford talks about kidney transplants and kidney exchange in his new BBC Pop-Up Economics podcast that you can listen to here (about 15 minutes).

Market design for everyone (from libertarians to socialists)

Organized markets inevitably have rules, which establish the playing field rather than determine outcomes, which is what makes market design different from, say, central planning. (One metaphor I like is that a free market is like a wheel that can rotate freely because it has an axle and well-oiled bearings...another is that boxing became a sport rather than a brawl, safe enough to play, only after the rules endorsed by the Marquess of Queensbury were adopted to cut down on deaths in the ring...)

It turns out that market design can be liked by everyone from socialists to libertarians.

Here's Friedrich Hayek anticipating the subject, in The Road to Serfdom:

“There is … all the difference between deliberately creating a system within which competition will work as beneficially as possible and passively accepting institutions as they are. Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez faire.”
 …
“The attitude of the liberal towards society is like that of the gardener who tends a plant and, in order to create the conditions most favorable to its growth, must know as much as possible about its structure and the way it functions.”

both quotes are from p71 of this edition, which you can search
*********

And here's the Socialist Party of Great Britain (on the occasion of the recent Nobel economics prize for market design):

"As socialism will be a non-market society where the price mechanism won’t apply to anything, the winners’ research will be able to be used for certain purposes even after the end of capitalism...
"No doubt it would continue to be used to allocate organs to transplant patients and students to rooms. In fact, this last could be extended to allocating housing to people living in a particular area. While they may not get their first choice, people would get something for which they had expressed some preference and that corresponded to their needs and circumstances.

Cooking the Books: A Nobel Prize for Non-Economics | The Socialist Party of Great Britain »

Organs and elections in Israel

Assaf Romm wrote to me yesterday about a plan to solicit registrations for Israel's deceased organ donor list at today's national elections. If it works, it might make sense to rethink whether recruitment of deceased donors in the US should be mostly at the Department of Motor Vehicles...

"Adi (the Israeli organ donor card foundation) has decided to use election day (tomorrow) as an opportunity to register people as organ donors. 

"Here is the ynet article (in Hebrew): 

לראשונה: עמדות החתמה לכרטיס אדי בקלפיות

Assaf summarizes:
"This is a joint project invented by someone at the National Transplantation Center and approved by the Ministry of Health.

About 750 Adi representatives will stand near the voting booths and will help citizens to sign the organ donor card at the same time they come to vote. This is the first time it has been done in Israel (and I couldn't find examples in other countries by searching in Google). Due to the recent advertising campaign for the (relatively) new priority law and increased attention in the public, Adi foundation expects about 720-750 thousand new organ donors during election day (and if they'll do half of that, it will still be an outstanding achievement in my opinion)."
++++++++++++++++

Post-election update:
Assaf writes:

"First, either I made a mistake reading, or they made a mistake when they wrote the article which they fixed later on. The numbers were supposed to be from 720,000 to 750,000 but not as an estimate but as a difference (which makes much more sense), that is, they expected about 30,000 new organ donor card holders.

"Second, The actual output was 15,000 new organ donor card holders, so about half as much as they expected. That also means about 20 donors per representative, which is about one donor every half an hour. Frankly, I think this is embarrassing and I wouldn't expect any less than that by putting an Adi booth at any crowded shopping mall... They are still very happy of course." 

Mechanisms of Matching: Stability and Applications (Lars Ehlers in French in Ottawa)

Lars Ehlers will be presenting a talk on Mechanisms of Matching: Stability and Applications, in connection with the 2012 Nobel prize. The announcement is in French...and I'm guessing the talk will also be.  Ehlers is a distinguished matching theorist in any language, so if you are in Ottawa tomorrow...


L’ASSOCIATION DES ÉCONOMISTES QUÉBÉCOIS DE L’OUTAOUAIS, EN COLLABORATION AVEC LE DÉPARTEMENT DE SCIENCE ÉCONOMIQUE DE L’UNIVERSITÉ D’OTTAWA,VOUS INVITE À UN COCKTAIL-CONFÉRENCE AYANT POUR THÈME :


« MÉCANISMES D’APPARIEMENT: STABILITÉ ET APPLICATIONS»
La conférence portera sur la contribution de Alvin Roth et Lloyd Shapley,
Lauréats du Prix Nobel en économie 2012
MARDI LE 22 JANVIER 2013, 17 h 30 à 19 h 30
À L’UNIVERSITÉ D’OTTAWA
120 rue Université, Faculté des sciences sociales (FSS), pièce 4007
Un cocktail et un léger buffet suivront
CONFÉRENCIER
Professeur Lars Ehlers, Département de science économique,
Université de Montréal
PRÉSIDENTE DE SÉANCE
Professeure Vicky Barham, Directrice, Département de science économique,
Université d’Ottawa
PRÉSENTATION ET DISCUSSION: 17H30 À 18H45


Monsieur  Lars Ehlers, professeur titulaire au Département de science économique de l’Université de Montréal, s’intéresse notamment à la manipulation des mécanismes d’appariement sur les marchés du travail et l’allocation d’objets indivisibles.  Il a remporté en 2012 le prestigieux ‘Social Choice and Welfare Prize’ reconnaissant sa contribution exceptionnelle à la théorie du choix social et de l'économie du bien être. Il est aussi membre du conseil d’administration de la ‘Society for Economic Design’, un organisme académique qui s’intéresse précisément au domaine de recherche pour lequel le prix Nobel 2012 a été décerné.  Dans le cadre de la compétition pour les Subventions ordinaires de recherche 2003 du Conseil de recherche en sciences humaines (CRSH), c’est d’ailleurs sa proposition de recherche qui a remporté la première place au Canada. Cette année, il a aussi été élu, et ce pour une durée de cinq ans, au  Council of the Society for Social Choice and Welfare. Ses travaux sur les mécanismes d’appariement ont notamment été publiés dans le Journal of Economic Theory.

Unraveling of college job hunting (and internships too)

Businessweek reports on the recruiting of undergrads, particularly undergrad business majors:

A Speedier Timetable for the College Job Hunt

"It used to be that undergraduate students could wait until winter or spring to conduct job searches. Students who plan to do that during the present school year may find that they’re out of luck.

"As the job market has improved, a growing number of employers are shifting most of their college recruiting to the fall. This year, employers said they planned to conduct about two-thirds, or 68 percent, of their college recruiting in the fall, up from 60 percent in the 2010-11 academic year, according to the National Association of Colleges & Employers’ Job Outlook 2013 report.

"The trend is more pronounced at undergraduate business schools, where recruiters from Fortune 500 companies, banks, and consulting firms are racing onto campuses to get access to top student talent as early as possible. Some are showing up as early as the end of August or September to talk to students, say college career services directors.
...
"The timetable for internship recruiting also has been pushed up to the fall over the last year or two, meaning that juniors must be ready to apply for internships almost as soon as they get on campus, say career services directors at business schools. At the Carlson School, the number of companies recruiting interns at the same time jumped 11 percent this fall over last, Kinross-Wright says.

"Steve Canale, manager of global recruiting and staffing services for General Electric (GE), says his company hires nearly all its full-time hires and about 75 percent of its interns in the fall. The company used to do more intern recruiting in the spring, but has shifted course in the last few years, he says.

“We do our internship hiring in the fall now because it is so darn competitive,” he says. “Once one company started doing it, we had to do it, too, because the good students go quickly.”

HAL R. VARIAN CHAIR IN INFORMATION ECONOMICS

Berkeley has a great new endowed chair, joint in Economics and the I-School, named for (and partly endowed by) the remarkable Google chief economist and former I-School Dean Hal Varian.

I SCHOOL'S FIRST ENDOWED CHAIR WILL BE THE HAL R. VARIAN CHAIR IN INFORMATION ECONOMICS

Hal R. Varian

More information:

• Hal R. Varian
• The Hewlett Challenge

January 19, 2012

The School of Information is delighted to announce the creation of its first endowed chair, the Hal R. Varian Chair in Information Economics, thanks to a generous gift from Hal R. Varian and matching funds from the William and Flora Hewlett Foundation.
“This is terrific for the school,” said I School Dean AnnaLee Saxenian, “and it’s fitting that the founding dean of the school is endowing its first chair. This will be a wonderful legacy for Hal.”
The Hal R. Varian Chair in Information Economics will fund the work of an eminent faculty member, with a joint appointment in the School of Information and the Department of Economics, whose work involves research and teaching in the area of Information Economics.
“I made this donation to support teaching and research in Information Economics,” explained Varian. “Information is the lifeblood of the economy. Everybody who works in the information field should know something about economics, and every economist should know something about information.”
Varian was the founding dean of the I School (then known as the School of Information Management & Systems) and is now the Chief Economist at Google, where he has been involved in auction design, econometric analysis, finance, corporate strategy, and public policy. He is also a UC Berkeley professor emeritus in business, economics, and information management.
A world-renowned economist, Varian has published numerous papers in economic theory, industrial organization, financial economics, econometrics, and information economics. He is the author of two major economics textbooks and the co-author of a bestselling book on business strategy,Information Rules: A Strategic Guide to the Network Economy. Varian also wrote a monthly column for the New York Times from 2000 to 2007.
“No area of research could be more exigent than the economics of information,” said Carla Hesse, the university’s Dean of Social Sciences. “This is a pathbreaking gift from a pathbreaking scholar.”
Dean Saxenian agreed. “The field of Information Economics is very important for understanding information and information behavior,” she said. “We couldn’t be where we are without a strong foundation in economics.”
The School of Information and the Department of Economics plan to hire a new faculty member by Fall 2013 to fill the endowed chair.
Varian’s gift allows the school to take advantage of a matching gift from the William and Flora Hewlett Foundation, through the Hewlett Challenge. The Hewlett Challenge is a $110-million challenge grant — the largest gift in the university’s history — to endow a total of 100 new faculty chairs across the university.
“The Hewlett matching grant offered a once-in-a-lifetime opportunity, and provided me a strong incentive to make a donation now,” said Varian. With the creation of the Hal R. Varian Chair in Information Economics, the Hewlett Challenge has now funded more than 90 of the 100 professorships and is on target to reach the full 100 soon.
“I have written a couple of papers on the incentive effect of matching grants,” commented Varian, “so in this case, it seems that ‘life imitates art.’”

**************
And here's the ad: you could apply for the position...
HAL R. VARIAN CHAIR IN INFORMATION ECONOMICS

Lunch (with me) for a good cause, to be auctioned on eBay

The auction will start this weekend...

The fundraiser auction for Jewish Family Services of Silicon Valley, for a lunch date with me (or with one of these real celebrities), is about to begin. The auction goes live on eBay this (Friday) evening, January 18, at 7:45 pm, and ends Monday evening, January 28, 2013. 

The webpage  http://www.jfssv.org/celebrities-Jan2013.html shows links to the auctions, which will work after the auction begins. If you try the links prior to then, eBay returns a message saying the auction has ended or is unavailable.

My auction link is  http://www.ebay.com/itm/261153805382 This link should only work beginning 7:45 pm on Friday January 18, and ending 7:45 pm Monday January 28, 2013.

Kidney exchange and market design at the NBER

The NBER has disseminated a lot of the work on kidney exchange, and asked me to summarize that work, in the December 2012 issue of the NBER Reporter: Kidney Exchange

The same issue also contains these brief profiles of me and of three other NBER research associates.

The NBER has been at the forefront of recognizing market design as a distinct new area in economics, with a Market Design Working Group organized in 2008, directed by Susan Athey and Parag Pathak.

You can browse the NBER working papers on market design here: Working Papers by NBER Working Group - MD

Economics papers in top 5 journals

A new NBER working paper by David Card and Stefano Della Vigna  offers a window on publishing in "top-5" economics journals, and how it has changed over time. For one thing, the number of submissions has gone up, while the number of papers published has gone down (and the number of top-5 journals seems to have remained constant...)

 These figures are from  NINE FACTS ABOUT TOP JOURNALS IN ECONOMICS
by David Card, and Stefano DellaVigna
Working Paper 18665, http://www.nber.org/papers/w18665

Market design as the visible hand

In Stanford Magazine, Marina Krakovsky has a profile of me and market design: The Visible Hand--A new breed of economist, Alvin Roth brings an engineering sensibility to fixing markets.

Josh Angrist and Parag Pathak on charter schools

A profile of MIT economist Josh Angrist in the MIT Technology Review discusses, among other things, some of his work on schools with Parag Pathak: The Natural Experimenter


"How far Angrist can take this research may depend on how many school districts will share useful data with him. Boston and Massachusetts, he says, are unusual in that "we have a great data infrastructure and wonderful coöperation with the city, the schools, and the state."

"That openness allowed him, Pathak, and other collaborators to produce some recent papers that he considers among his best. Boston has used a lottery system to determine which interested students will attend charter schools; when the number of applicants for a school exceeds the space available, the researchers are able to compare the performance of students accepted to a charter school with that of equally motivated students who were not chosen. In a 2009 report, they found that certain Boston charter schools had produced an average gain of roughly 15 percentile points for middle-school students on the state math exams.

"Two years later, however, Angrist and colleagues found that in Massachusetts districts outside Boston, charter-­school students did no better on average than students at other public schools. Angrist thinks charter schools may be too different from one another to justify sweeping conclusions about whether they provide better education, even though the best ones seem to adhere to the formula of extended instruction time, a focus on core math and reading skills, and an emphasis on good behavior."

Pet food on the farm in Switzerland: dogs and cats for human consumption

Sven Seuken alerts me to some food choices in Switzerland that are legal  so long as they are non-commercial: Dog And Cat Meat Is Being Served Up By Farmers In Switzerland - And It's Legal

"According to Tages Anzeiger newspaper, farmers in the Appenzell and St Gallen areas regularly dine on the animals, as is popular in China, Korea and Vietnam.

"One farmer, speaking under anonymity for fear of reprisals from animal rights activists, said it was "nothing unusual" to eat dog or cat meat.

...

"While there are no official figures of how many of the common pets end up on dinner plates, the practice is legal - provided the animal is killed humanely and the meat is not sold commercially.

"Yet while dining on what many of us regard as treasured companions is permitted, it is largely looked down upon."

Nice sentence about unraveling of college admissions

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

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

That's from How to Choose a College

Time to end the war on drugs?

Gary Becker and Kevin Murphy, in the WSJ, consider the case for decriminalizing drug use, and drug sales.
Have We Lost the War on Drugs?

They seem to suggest that the major effect of drug laws on demand work by keeping street prices high. But their argument makes sense even if you think that social opprobrium and risk of prison are important parts of the high price.

Here are what struck me as the key paragraphs:

"Some evidence is available on the effects of Portugal's decriminalization of drugs, which began in 2001. A study published in 2010 in the British Journal of Criminology found that in Portugal since decriminalization, imprisonment on drug-related charges has gone down; drug use among young persons appears to have increased only modestly, if at all; visits to clinics that help with drug addictions and diseases from drug use have increased; and opiate-related deaths have fallen.

"Decriminalization of all drugs by the U.S. would be a major positive step away from the war on drugs. In recent years, states have begun to decriminalize marijuana, one of the least addictive and less damaging drugs. Marijuana is now decriminalized in some form in about 20 states, and it is de facto decriminalized in some others as well. If decriminalization of marijuana proves successful, the next step would be to decriminalize other drugs, perhaps starting with amphetamines. Gradually, this might lead to the full decriminalization of all drugs.

"Though the decriminalization of drug use would have many benefits, it would not, by itself, reduce many of the costs of the war on drugs, since those involve actions against traffickers. These costs would not be greatly reduced unless selling drugs was also decriminalized. Full decriminalization on both sides of the drug market would lower drug prices, reduce the role of criminals in producing and selling drugs, improve many inner-city neighborhoods, encourage more minority students in the U.S. to finish high school, substantially lessen the drug problems of Mexico and other countries involved in supplying drugs, greatly reduce the number of state and federal prisoners and the harmful effects on drug offenders of spending years in prison, and save the financial resources of government.

"The lower drug prices that would result from full decriminalization may well encourage greater consumption of drugs, but it would also lead to lower addiction rates and perhaps even to fewer drug addicts, since heavy drug users would find it easier to quit. Excise taxes on the sale of drugs, similar to those on cigarettes and alcohol, could be used to moderate some, if not most, of any increased drug use caused by the lower prices."

Marriage markets and credit markets

 With attitudes about money being an important ingredient of marital compatibility, is it any wonder that a readily available index for one is (apparently) increasingly being used to judge the other? The NY Times is on the story: Even Cupid wants to know your credit score


"The credit score, once a little-known metric derived from a complex formula that incorporates outstanding debt and payment histories, has become an increasingly important number used to bestow credit, determine housing and even distinguish between job candidates.

"It’s so widely used that it has also become a bigger factor in dating decisions, sometimes eclipsing more traditional priorities like a good job, shared interests and physical chemistry. That’s according to interviews with more than 50 daters across the country, all under the age of 40.

“Credit scores are like the dating equivalent of a sexually transmitted disease test,” said Manisha Thakor, the founder and chief executive of MoneyZen Wealth Management, a financial advisory firm. “It’s a shorthand way to get a sense of someone’s financial past the same way an S.T.D. test gives some information about a person’s sexual past.”
...
"A handful of small, online dating Web sites have sprung up to cater specifically to singles looking for a partner with a tiptop credit score. “Good Credit Is Sexy,” says one site,Creditscoredating.com, which allows members to view the credit scores of potential dates who agree to provide the numbers.

"On another site, Datemycreditscore.com, a member posted on the Web site’s home page that others should to “stop kidding” themselves and realize that credit scores do matter."

Death and privacy (and transplantation and market design)

The latest issue of the AJT Report, a news summary in the American Journal of Transplantation, concerns The Unintended Consequences of Privacy, reporting on a recent decision by the Social Security Administration to decline to share some data about deaths, due to privacy concerns.

Apparently this decision will mean that the Health Resources and Service Administration (HRSA) will no longer be able to disclose to transplant centers the deaths that occur of patients on the waiting list for deceased donor organs, or after transplantation.

This could turn into a big problem, unless it is resolved soon, because information about deaths is critical for managing the transplant system at all levels.

"According to Patricia W. Potrzebowski, PhD, executive director of the National Association of Public Health Statistics and Information Systems (NAPHSIS), “SSA never had the authority
to release state death records through the public DMF. This is because state records are governed by state statutes and regulations. State statutes and regulations vary as to who may access death record information. In some states, death record information is publicly available; in others, even the fact of death is held in strict confidence.”
***********

It is becoming increasingly clear that privacy is a big issue in market design in general. The AJT report coincidentally juxtaposes the two issues by including some Nobel news at the end of the report.

Israel bans excessively skinny models

Israel bans excessively skinny models: New law taking effect with start of 2013 requires models to have Body Mass Index (BMI) of at least 18.5.

"Too thin is no longer "in" when it comes to the fashion industry in Israel as with the start of 2013 the so-called “models law” has come into effect, banning underweight models in advertisements.

The law, approved by the Knesset in March, requires models to have a Body Mass Index (BMI) of at least 18.5, considered to be the minimum for a healthy person.

Robert Aumann on Shapley and Roth and matching and market design

Bob Aumann writes in the February 2013 Notices of the American Mathematical Society (in a column hosted by Elaine Kehoe): Shapley and Roth Awarded Nobel Prize in Economics

After summarizing Shapley's work, Aumann (who shared the 2005 Nobel Economics prize) concludes "On each of these counts, Shapley has done more than all the previous game theory Nobelists, even when taken together."

I should add that I find myself moved to be saluted by Aumann in the same article (and not just because he praises me too extravagantly:). When I was a young game theorist in the 1970's, Bob Aumann and Bob Wilson were for me the welcoming faces of game theory, and I resolved, if I thrived, to try to be as supportive of young people as they were. I hope I've succeeded in that too.

Not every new discipline has the welcoming, community-of-scholars culture that game theory enjoyed in those days. I hope that market design continues to thrive in this way (as well as being a team sport).

My guess from my limited personal experience is that the "culture" of a discipline is particularly important when it is still new...that might be something for historians and sociologists of science to look into.

Roberto Serrano on Lloyd Shapley

I had the unexpected pleasure of running into Roberto Serrano and Vince Crawford in Stockholm, where they were guests of the Nobel Foundation.

 Now here is a forthcoming paper by Roberto, on Lloyd Shapley's contributions:

R. Serrano, “Lloyd Shapley’s Matching and Game Theory,” Scandinavian Journal of Economics, forthcoming.

High bids for tuna at Tsukiji fish market celebrate the new year

Bluefin tuna sells for record $1.76 million at Tokyo auction, 3 times previous record

"A bluefin tuna sold for a record $1.76 million at a Tokyo auction Saturday, nearly three times the previous high set last year
...
"In the year’s first auction at Tokyo’s sprawling Tsukiji fish market, the 222-kilogram (489-pound) tuna caught off northeastern Japan sold for 155.4 million yen
...
The winning bidder, Kiyoshi Kimura, president of Kiyomura Co., which operates the Sushi-Zanmai restaurant chain, said “the price was a bit high,” but that he wanted to “encourage Japan,” according to Kyodo News agency. He was planning to serve the fish to customers later Saturday.

"Kimura also set the old record of 56.4 million yen at last year’s New Year’s auction, which tends to attract high bids as a celebratory way to kick off the new year — or get some publicity.

Advice on interviewing at the job market meetings

Good luck to all those interviewing at the job market meetings in San Diego!

Here's some advice, written by an historian, that applies well to economics too (and probably any academic job market): Advice for the Job Season: Interviewing

"My primary advice for interviewing is to tell candidates that THE SEARCH COMMITTEE MEMBERS WANT YOU TO DO WELL!!!
...
"I promise you, we did not just slog through hundreds of pages of recommendation letters and your prose, pick you out of hundreds of applicants, fly to some god-forsaken icy city, and swill cheap coffee and bagels in a cold hotel room waiting for you because we are eager to humiliate you. While it is possible that there is someone in that room who doesn’t like your work, the majority of the committee has gone to the mat to get you onto the interview list, and those search committee members are secretly praying that you will hit a home run. They are on your side.

"You may well not know which members those are, though, so do not make any assumptions about who are your friends and who are potential enemies on a committee. Treat everyone as interested colleagues. Even the old jerk in the corner asking impossible questions might be on your side. And if not, the chances are good that everyone else in the room recognizes that s/he’s an old curmudgeon, and are hoping that you will handle her/him with aplomb.
The committee members want you to do well, so help them out. Almost certainly there will be faculty members from different fields in the room who only know your field generally. So explain immediately what you do, and why it is important to someone outside your specialty. Do not make them plead with you to articulate why what you do is significant. (Clearly, they think it is, or they would not have brought you in for an interview."

Costs of early admissions--to colleges

For starters, here's a November 15 column from the Chronicle of Higher Ed that I hesitated blogging about, since the URL seems to suggest it's just a draft. But it's been out for a while now despite that (http://chronicle.com/blogs/headcount/draft-do-not-publishthe-costs-of-early-admission-programs-are-many/32792)
The Costs of Early-Admission Programs Are Many

The author, Louis Hirsh, was an admissions director at Deleware, and he recounds some of the costs of unraveling from the University's perspective.

There is no a virtue in giving teachers and counselors less time to write recommendations, especially when their letters would be more useful if they were written after they had seen more of their student’s senior year work.

Meanwhile, at admissions offices the growing number of early-notification applicants compresses the work of several months into several weeks. How ironic that we spend much of the year imploring students to write thoughtful applications only to hobble ourselves with early deadlines that make it impossible to give those applications the careful consideration that they richly deserve.

Defenders of early notification say that it relieves stress to be able to sit down for a holiday meal in December and know that you already have a college admission in hand. I don’t doubt that. I also agree that those who get “no” answers at least know where they stand, and can turn their attentions elsewhere.

The problem is that for many the answer is not “yes” or “no,” but “maybe.” If yours is a very selective college, the majority of your early applicants will become deferrals who are caught in an admissions limbo, an extended wait list, if you will. What about those students and their stress levels?

As anxious—and sometimes irate—parents and counselors call to ask about the decision and their student’s chances for eventual admission, your staff spends an inordinate amount of time in January and February talking to disgruntled people. That is bad for morale, and it certainly isn’t how you want your colleagues spending their time.

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In the meantime, Harvard Magazine reports
"EARLY ACTION ACCELERATES. The College received 4,856 early-action applications for admission to the class of 2017, up 15 percent from 4,228 last year, when the program resumed after a four-year hiatus. Most other Ivy League schools also reported more early applicants this year, as students seek an admissions edge."

Supreme Court Clerks--some hiring already for 2014

The Above the Law blog has the scoop: Supreme Court Clerk Hiring Watch: OT 2013 and OT 2014, which also has some links to background material on clerking for the Supremes...

Eating horse meat in France: could it become repugnant even there?

Alex Peysakhovich sends along the following evidence that there are those in France who find eating horsemeat repugnant...and take out ads on buses. Of course the chevalines (horse butchers) are fighting back with stickers of their own...

Repugnant transactions at year's end...

Each of the stories below is about a transaction still regarded as repugnant in England, Israel, and Australia, respectively, but for which things may be different in the coming year...including the final story from Russia, about an effort to make U.S. adoptions illegal (so that Russian orphans would remain so...)

Gay marriage plans are totalitarian, says Archbishop of Westminster

Record number turn out at Boxing Day hunts after Tories admit defeat on ban

Israel to Review Curbs on Women’s Prayer at Western Wall

Women who donate their eggs deserve compensation

Putin Signs Bill That Bars U.S. Adoptions

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And here are some stories about transactions that are less repugnant than they used to be...

Same sex marriage becomes legal in Maine
"Voters approved the new law in November, making Maine one of the first three states, along with Washington and Maryland, to allow same-sex marriage by popular vote. The law has already taken effect in Washington State; Maryland’s will do so on Tuesday.
"Same-sex marriage was already legal in Connecticut, Iowa, Massachusetts, New Hampshire, New York, Vermont and the District of Columbia, but those laws were enacted either by lawmakers or through court rulings."

in vitro fertilization (IVF): "For a while, the press kept track of each new I.V.F. birth: one more reported before the end of 1978; four by the middle of 1980; the first in the United States at the end of 1981. In 1982, Lesley gave birth to another daughter, Natalie; she was the world’s 40th test-tube baby. And then people stopped counting. I.V.F. had moved almost imperceptibly in the public mind from unethical to frightening to just a bit unusual — and then, finally, to something so ordinary it wasn’t even noticed anymore."

Celsius' temperature scale (and other delights at Uppsala University)

While in Sweden I had a delightful visit to Uppsala University.

It was there, in the 1700's (as the University was  already nearing its 300th anniversary) that Anders Celsius undertook the meteorological research that required his invention of the temperature scale that bears his name. Except not quite in the form we know it today.  Here's a picture I took of one of his original thermometers, through the display case in a University museum: If you can click through and look at the enlargement, you'll see that the top of the scale (far left), which marks the boiling point of water, is marked 0 degrees, while the middle of the scale, which marks water's freezing point, is marked 100. (Celsius apparently felt that solids were 'more' than gases...). The reversal to what we know today as the conventional Celsius scale came in 1745, shortly after his death.

***********

It turns out that Uppsala University has other interesting museums, and in one of them I took a picture of what is said to be an example of the first circulating bank note...

More photography business in Stockholm

My recent trip to Sweden made me of interest to a variety of professional photographers, and in turn gave me a glimpse into the ways they earn their livings. Here's the website of the Swedish photographer Otto Westerlundh. If you scroll down his web page you can get some idea of the wide variety of pictures he shoots. He took some pics of me at a reception in Stockholm.

Speaking of photos, below is one my wife took with her phone, at the rehearsal for the Nobel award ceremony. You can see me practice receiving the award from a stand-in for the Swedish king. You can also pick out the Californians from among the laureates: my Stanford colleague Brian Kobilka is the other fellow in jeans...(The same photo, more or less, later in the day at the actual ceremony is here.)

Towards decriminalizing drugs?

The Economist reports on remarks by the outgoing Mexican President Felipe Calderón: "Impossible" to end drug trade, says Calderón

"Mr Calderón’s comments sum up what seems to be a growing consensus: stopping or even seriously reducing drug consumption has so far proved impossible, so it is time to focus on ways of making that consumption less harmful. That sort of thinking has been fashionable for a long time on the demand side, with innovations such as needle exchanges and methadone replacement now common in many rich countries. The next step is to explore legal ways of managing the supply side, as Colorado and Washington have recently voted to do.

"Sitting presidents such as Juan Manuel Santos of Colombia and Otto Pérez Molina of Guatemala are pushing for a rethink. As a result of this agitation the Organisation of American States, a regional body, is compiling a report on drug policy which is expected to explore alternatives to the current regime. It will be interesting to see if Mr Calderón, who is widely expected to take up a post at Harvard after leaving the presidency in December, gets bolder still in his retirement."

HT: László Sándor

Returning items at stores in the US and Europe: two different equilibria?

A recent article about the policies adopted by American stores regarding returns, particularly of gifts, has gotten me thinking about the different equilbria which (I am under the impression) exist in Europe and the U.S.

Most U.S. stores have a no questions asked return policy. Subject to some limitations, you can return an item, for any reason, i.e. it doesn't have to be broken. The limitations may include things like time elapsed since purchase, whether the item has been used, etc. But policies are more lenient on items received as Christmas gifts (and here's the story that made me think of all this: Navigating Retail Holiday Return Policies. In many cases you can get your money back, in some cases you might just get credit for another purchase.

My impression is that in Europe you can return items for repair, but not for exchange.

Why are the policies different?  It seems to me that they may both be in equilibrium, so that it is hard to switch from one to another.

If an American store were to adopt a no return policy, that might seem to signal something about the unobserved quality of their goods, and it would shift sales to competitors who maintained easy return policies. And easy returns promote sales, since there is less risk in buying something, bringing it home, and seeing how it looks.

But if a European store were to adopt an easy return policy, while its competitors did not, then it would invite adverse selection of shoppers who were planning to return things (e.g. returning a gown after wearing it once). These shoppers plague American stores too, but they are spread among all stores and are a cost of doing business. But a European store that was the first to adopt an easy return policy would attract all the bad apples...

Perhaps European readers can tell me if my impressions are correct about the differences in store policies across the water...

Kidney exchange in Canada

Moving to chains in Canada too...


Heartbeat: A chain of faith, a gift of life: Revolutionary organ exchange program can involve a domino chain of up to 10 people across Canada, and it drastically reduces wait times for transplant recipients

 "Nemeth was feeling increasingly ill and didn’t have that long to wait.

"Luckily, she didn’t have to. In early 2012, at her doctor’s urging, she joined the Living Donor Paired Exchange program.

"In the registry, donor-recipient pairs whose organs are incompatible with each other can be matched with others in the same situation and the organs swapped to complete transplants. There are Good Samaritans — non-directed anonymous donors — who simply donate a kidney out of altruism also entered in the registry. Algorithms determine matches to optimize use of rare blood and antibody types: swaps that result can involve up to five-pair chains — up to 10 people in cities across Canada all intricately linked in a complex “domino” transplant.

"The registry was founded as a pilot project in three provinces, including B.C., in 2009. It has since gone national and is overseen by Canadian Blood Services, which conducts three (formerly four) searches or “runs” a year.

"To date, there are about 145 registered pairs.

"More than 140 transplants have been performed, with the first cross-country multi-hospital swap in June 2009. Nemeth’s own chain involved three pairs: done at St. Paul’s and in Winnipeg.

"The program not only shortens waits and saves lives, but it also saves money: dialysis costs $60,000 a year while a kidney transplant is around $25,000 plus $6,000 a year for medication.

"Even before the national registry, provincial hospitals like St. Paul’s were doing ad hoc local swaps for just these reasons.

“We were basically doing these on the back of an envelope,” Dr. Landsberg said, adding St. Paul’s did its first regional domino transplant around 2006.

"But the national registry has been a true game-changer. Because of it, he said, “the number of difficult to match patients who were stacked on that wait-list and who I predicted would be on there forever have been able to get transplants.”

"And despite the tenuous nature of the chains, so far, he said, “We’ve never had a donor back out.”

The global strategic maple syrup reserve

The global strategic maple syrup reserve has been breached, here's the NY Times story: In $18 Million Theft, Victim Was a Canadian Maple Syrup Cartel

And here is the site of the Federation of Quebec Maple Syrup Producers

I used to bring small bottles of New England maple syrup with me as American themed house gifts when I traveled overseas...but it turns out that Canada is the big producer (I guess the Canadian flag is a clue...)

Neil Dorosin on school choice

Neil Dorosin: The Elephant in the Classroom – School Choice Exists. We Just Manage it Poorly.

Same sex marriage in France: protest and counterprotest

Protests erupt in France over same-sex marriage

"More than 100,000 protesters organized by Catholic groups staged separate demonstrations in French cities over the weekend to protest against government plans to legalize same-sex marriage next year.

"Most of them took to the streets on Saturday, backed by the French Catholic Church and joined by several senior clerics, and several thousand more paraded with ultra-traditionalist Catholics in Paris on Sunday."

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Topless activists clash with an anti-gay marriage protest in France

Market designers at Yahoo!, Google, eBay and Microsoft

The Economist recently celebrated the contributions of Preston McAfee, Hal Varian, Steve Tadelis and Susan Athey: Micro stars, macro effects: Meet the economists who are making markets work better

Video of Nobel prize awards ceremony

I'm almost recovered from my trip to Stockholm:) Here is the video of the Nobel presentation ceremonies. Economics starts around 1:12. with intro in Swedish by Thorsten Persson, and 1:16 in English
http://www.svtplay.se/video/892980/prisutdelningen-i-konserhuset

And here are the iconic pictures from the Nobel website:

Update: the Nobel Foundation website now has short video clips of both me and Lloyd receiving our prizes:
Alvin Roth receives his prize
Lloyd Shapley receives his prize

Martin Shubik

The celebration of Lloyd Shapley at the recent Nobel week naturally makes people think of his long term collaborator Martin Shubik. There's a nice discussion of his work by the archivists at the Duke University libraries, which houses his papers: The Martin Shubik Papers: From Early Game Theory to the Strategic Analysis of War

"While Shubik was born in New York City in 1926, he received his early education in England. After moving to Canada, he graduated with a B.A. in mathematics and subsequently with an M.A. in political economy from the University of Toronto in 1947. Equipped with this background, Shubik arrived at Princeton University in 1949, where the archival record begins. He received a Ph.D. in economics in 1953 under the supervision of Oskar Morgenstern, one of the founding fathers of game theory. The influence of his supervisor becomes apparent in Shubik’s collection, not only through the class notes Shubik took of Morgenstern’s lectures and in the correspondence with him throughout the years, but also indirectly through Shubik’s life-long contributions to game theory and its application to economic problems. And, like Morgenstern, Shubik frequently voiced a critical attitude towards purely theoretical work.

"Shubik’s collection is a treasure-house of primary resources on economics, especially for researchers interested in the early years of game theory. Shubik was part of an inspiring group of students during his stay at Princeton, including Harold Kuhn, John McCarthy, John Milnor, John Nash (Nobel Prize, 1994), Norman Shapiro, and Lloyd Shapley (Nobel Prize, 2012), who were pioneers in the field of game theory and would continue to shape the history of American mathematical economics during the second half of the 20th century. Innumerable drafts of Shubik’s collaborative works, often accompanied by correspondence and research notes by his co-authors, afford an inspiring set of resources evoking that historical period. The collection contains Shubik’s and Shapley’s drafts and notes on their joint works on game theory, from their early papers in the 1950s to their collaboration during the 1970s at the RAND corporation. The collection also allows for personal glimpses into Shubik’s life. For example, Shubik’s life-long friendship and professional collaboration with Shapley is reflected in the extensive correspondence throughout their academic careers. Similarly, Shubik’s exchanges with Nash (sometimes through humorous cards and joke letters) offer a unique source for historians interested in the early years of game theory and the history of modern economics."

Market design is a team sport

Muriel Niederle has been posting some pictures from Stockholm, and here are some of mine...

First, the final slide from my Nobel lecture:

It turns out that parts of the teams for kidney exchange, school choice and medical matches made it to Stockholm, and those folks look a little different in tails and gowns:

School choice: Parag Pathak, Al Roth, Atila Abdulkadiroglu, Neil Dorosin

Medical matches: Elliott Peranson, Al Roth, Muriel Niederle

Kidney Exchange: Frank Delmonico, Al Roth, Mike Rees, Itai Ashlagi

David Warsh on Lloyd Shapley and his colleagues

After a head feint towards another topic, David Warsh writes about Lloyd Shapley and his colleagues David Gale, Herb Scarf, and Martin Shubik.

"The book I yearn to read some day is a deep examination about the way that psychology and strategic behavior came to economics in the twentieth century, in the guise of game theory. So far its leading characters pop up as individuals, either the subjects of biographies (John von Neumann in books by Steve Heims  and Norman Macrae) or recipients of Nobel Prizes – John Nash eighteen years ago (not long thereafter the subject of Sylvia Nasar’s A Beautiful Mind), and now Lloyd Shapley. If you had gotten up early yesterday morning, you could have seen, streaming live from Stockholm, via the Internet, the 89-year-old Shapley, an old man grasping a sheaf of notes, attempting to deliver a stripped-down talk about one aspect of his work, intermittently puzzled and confident, until a wave of applause relieved him of the need to persevere.

Against long odds, Shapley won the game that senior players sometimes call “Beat the Reaper.” Considering that he and Nash met as young men in the extraordinary hothouse that was the Princeton University Department of Mathematics in the days soon after World War II he is fortunate indeed. In a setting dominated by the polymath von Neumann, he and Nash quickly shouldered aside the founding father and divided up among themselves and their friends the competing programs that game theorists have pursued ever since.

You have to admire the alacrity with which the committee of the Royal Swedish Academy of Sciences acted, pairing Shapley, of the University of California at Los Angeles, with the vigorous, young Alvin Roth, who just left Harvard for Stanford University (a stripling at 60.) They did much the same in 1996, with William Vickrey, 82, of Columbia University; and, in 2007, with Leo Hurwicz, 90 of the University of Minnesota, pairing them in each case with much younger men. In Hurwicz’s case they beat the Reaper by less than a year; Vickrey died a few days after learning of his award, his heart burst from the renewed excitement of the chase. "

...

"The problem with the prizes is that they obscure the networks that have led to them, with countless others left out. Characteristically, the last slide of Roth’s lecture yesterday contained the photographs of fifteen or twenty collaborators who helped turn market design into one of the most exciting fields in economics: surgeons, medical administrators, educators, junior colleagues.  Such a slide, had it been prepared to accompany Shapley’s lecture, would have included a very different dozen or two collaborators, beginning with the mathematician’s famous father, the Harvard astronomer Harlow Shapley, who was a story in his own right, having successfully described in 1918 the size of the Milky Way galaxy and determined our sun’s position in it, only then to fight and lose a lifelong battle with Edwin Hubble about what lay beyond the boundaries of our galactic home (nothing, Shapley said). Three other contemporaries whom the younger Shapley met first atPrinceton, back in the day, would stand out.

There would be David Gale, who died in 2008. at 86, Shapley’s mathematician collaborator on the 1962 paper “College Admissions and the Stability of Marriage,” which was the beginning of the skein of work for which this year’s prize was given.  Had he lived a little longer, Gale might well have shared in the award. But there seemed nothing unfulfilled about Gale’s life, which was described inthis excellent article by the University of California at Berkeley (where he taught for forty years), as a passionate father, puzzle-monger, avid skier, tennis player, traveler and jazz aficionado. (He kept an office in the Ecole Polytechnique inParis as well.)

Then there is Herbert Scarf, 82, ofYale University, Shapley’s co-author on a key paper in 1974, “On Cores and Indivisibility.”  Scarf’s contribution to the study of traditional one-sided markets, which is the way the process of kidney exchange is understood, was discussed at some length in the long citation that accompanied the Nobel award. Unexamined, however, was Scarf’s forty-year quest to achieve a satisfying mathematical description of economies in which increasing returns, meaning falling costs, play a prominent role. Such increasing returns, or economies of scale, exist everywhere in the modern world, at least up to a point. Yet a satisfying framework for examining them so far had eluded mathematical economists, including Scarf.  The editor of his collected papers quotes a Chinese poem in this connection: “An old war-horse may be stabled, yet still it longs to gallop a thousand miles; and a noble-hearted man, though advanced in years, never abandons his proud aspirations.”

Finally there is Martin Shubik, 86.  Shubik, too, collaborated with Shapley often over the years; their 1971 paper on the “assignment game” was a key step in the  clear statement of the line of work for which the prize was given. “He was a superb mathematician, and I had a good economic intuition,” Shubik says of Shapley; “together we made a very good mathematical economist.” But Shubik has work of which he is more proud.  His 1959 article, “Edgeworth Market Games,” was the first to relate a truly economic concept (the contract curve) to a game-theoretic concept (the core),according to Eric Gordon, and so formed a bridge which game theorists have been crossing ever since.  By the time he and Shapley stated the connection formally ten years later, in “On Strategic Market Games,” Shubik’s future was assured.  It was Shubik who apparently campaigned successfully for Shapley for this year’s prize."

Allocating top level domain names

While I was away, Peter Cramton has been busy with an interesting allocation problem: Update on Applicant Auction Conference.

He also includes the following links:

"To better understand what the Applicant Auction is about please take a look at the following two posts on CircleID:

Making the Most of the Draw: The Applicant Auction Conference

Applicant Auction for Top-Level-Domains: Resolving Contention Fairly, Efficiently, and Transparently

Finally if you want to get into the technical details of bidding incentives and bidding strategy take a look at our research paper on the topic:

Detailed research paper explaining the plan  [Presentation, Short Version]"

Gangnam Stanford Style

After dinner speech

After the Nobel banquet, a two minute speech.

Update: here it is on a local file...

Muriel Niederle is blogging about experimental and behavioral economics

Here's her first post, posted from Stockholm:

Experimental Economics Coming of Age

Interview by the Nobel foundation

Here's a 25 minute interview, which starts a bit slowly, but in which I get to talk about matching: Video interview with Alvin E. Roth

Around minute 19 I'm asked about free markets and I talk about how free markets have rules that let them operate freely. I suggest the metaphor of a wheel that can rotate freely, because it has well oiled bearings: "wheels don't occur naturally, they're human creations. And so are markets."