Public comments at the SEC about IEX's exchange application: a seminar on the politics of market design

There's an exciting (if confusing) practical seminar on market design going on on the SEC's webpage these days, where they are posting comments on IEX's application to become an exchange.

First, here are some background news stories:

Matt Levine at Bloomberg, in December: The 'Flash Boys' Exchange Is Still Controversial

Robin Wigglesworth at the FT, this month: ‘Flash Boys’ trading venue application triggers backlash
"The Investors’ Exchange, a trading venue made famous by Michael Lewis’ Flash Boys book on high-frequency trading, has applied for full stock market status. But the application has triggered a deluge of responses and fanned the debate about the very nature of the US equity markets...."

And here is the SEC's comment page, a sort of flash mob exchange about markets and market design.

Guide to the perplexed: I like Eric Budish's comment, here: #371 … http://www.sec.gov/comments/10-222/10222-371.pdf.

About how to go through the many other comments, Eric writes: 
"For pro-IEX letters, the best place to start is the detailed letters from IEX itself. The letter from Healthy Markets is also very good on details. The letters from Southeastern Asset Management (co-signed by many other asset managers) and from Norges Bank (Norway’s sovereign wealth fund) are a bit shorter but give a sense of how pro-IEX asset managers see the debate.

For negative letters, the letters from trading firms Citadel and Hudson River Trading are quite detailed. The letter from NYSE has the distinction of being both detailed and comparing IEX to the fraudulent frozen-yogurt shop on Seinfeld.

Also recommended is the letter from Goldman Sachs, which, like my letter, supports IEX’s application but mostly talks about deeper structural issues."


You can search the comments, e.g. for "IEX"  or "Goldman Sachs," etc. to find them... 

Military draft registration, now for women as well as men?

The recent discussions of draft registration for women have invited us to recall the discussions about conscription versus a volunteer army. This, from the Sunday NY Times:
Economists Against the Draft By BINYAMIN APPELBAUMFEB. 6, 2016

One argument that I hadn't recalled being made in just this way is that the wealthy manage to avoid drafts better than the poor, so that even a conscripted army tends to be manned (if that's still the right word) disproportionately by poorer people, but that at least the financial costs of a volunteer army fall on the taxpayers, while the financial costs of a conscripted army fall on the conscripts and their families.

The discussion about conscription versus a volunteer army brings up some issues that also arise in discussions about whether organ donors may be compensated.

A WSJ reporter prepares for Valentines Day by interviewing economists about dating sites

Here's a WSJ interview that mentions, among other things, Soo Lee and Muriel Niederle's experiment with virtual roses:

How Economists Would Fix Online Dating
A ‘thick’ market and cost-benefit analysis help avoid ‘romantic unemployment’

"One recent experiment in improving online dating sites through signaling mechanisms, conducted by economists Soohyung Lee and Muriel Niederle, gave members of a Korean dating site a limited number of virtual roses, meant to indicate special interest in a person, to include with their messages to potential matches. The result was that people were more likely to respond to those who sent them a rose..."

Mishaps while flying transplant organs

This news story stopped with the plane, and doesn't say what happened to the organ...
No one hurt when jet scheduled to pick up donor organ slides off runway in Wheeling

Repugnance for money: The Other Paris, by Luc Sante

Paris is romanticized as the opposite of NY, and poverty as freedom from money, in this review in The Guardian of The Other Paris by Luc Sante

"“My book is a kind of love letter to the city as it was and before it got overtaken by money. Money, for me, may not immediately kill people in the way terrorism does, but it does certainly change the fabric of daily life in much deeper and more insidious ways. The terrorist may be defeated in 50 or 20 or 10 years, but money is going to be much harder to defeat.”

Repugnant transactions in zoos

The NY Times ran the following story a little while ago:
Zoo’s Public Dissection of Lion Makes Denmark Again a Target of Outrage

"On Thursday, staff members at a zoo in Odense, the country’s third-largest city, publicly dissected the corpse of a 9-month-old lion in front of an audience including children. The lion, a healthy female, was put to death in February after the zoo sought in vain to find her another home.

"The move comes more than a year after another Danish zoo, in Copenhagen, generated global outrage when it killed a healthy 2-year-old giraffe named Marius, ostensibly to reduce the risk of inbreeding, before dissecting him and feeding him to lions.
...
"Ms. Christensen said the lion was put down to prevent inbreeding, since she was living in the same enclosure as her father and the two would have been likely to mate. The lion had since been kept in a freezer.

"She noted that while it was a preference in some countries, like the United States, to use contraception to keep zoo populations under control and prevent inbreeding, many zoos in Denmark and across Europe considered it better for animal welfare officers to let animals breed and express their natural instincts, even if that meant culling some of the offspring, as a last resort, for reasons of conservation."

The high end marijuana market in New York City

Jacob Leshno draws my attention to this article on how the legalization of marijuana in some U.S. locations (like Colorado, where I am this morning) is changing the black market in NYC:

Step inside New York City's marijuana black market in the era of legalization
Marijuana is a $2 billion-a-year industry in NYC. Like other small businesses, the city's dealers are adjusting to changing tastes and shrinking margins

"The city is full of high-end pot-delivery services in addition to solo dealers who make house calls. But with its gourmet edibles and pharmacy-like range of products, Zach’s business illustrates what the legalization wave nationwide is doing to the black market in New York.

"Zach collaborates with a professional pastry chef on the edibles but gets most of his inventory from California, where a lax medical-­marijuana program going back two decades has fueled a bustling gray market. Colorado, which has legalized recreational use, is another source. A network of local wholesalers saves him the trip out West."
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And NYC now will have medical marijuana dispensaries as well...
First Medical Marijuana Dispensaries in New York Open
By JESSE McKINLEY and ELI ROSENBERG JAN. 7, 2016

"Permitted under a 2014 law signed by Gov. Andrew M. Cuomo, New York’s entry into the medical marijuana marketplace comes after years of lobbying by lawmakers on behalf of patients, including children, for whom the drug is a palliative to debilitating illnesses. Yet even after the law’s adoption, some supporters of the concept criticized its stringent regulations, including that only a limited number of conditions qualify for medical use of marijuana and that it is sold in only 20 locations statewide. The drug also may not be smoked in New York, a stipulation of Mr. Cuomo’s approval, and must be processed into other forms by the companies that grow it.
...
"A late adopter to a trend that is now 20 years old, New York, in allowing medical marijuana, joins states as varied as conservative Montana and liberal California, which in 1996 became the first state to legalize the drug’s use as medicine. Alaska, Colorado, Oregon, Washington and the District of Columbia also allow the drug’s recreational use."

W.P. Carey Lecture: Who Gets What and Why at Colorado College today

W.P. Carey Lecture:Who Gets What and Why 

with Nobel Laureate in Economics Alvin Roth

Presented by Colorado College at Cornerstone Arts Center Richard F. Celeste Theatre

February 4, 2016

Event Summary:Alvin Roth is the Craig and Susan McCaw professor of economics at Stanford University and the Gund professor of economics and business administration emeritus at Harvard University. Professor Roth has made significant contributions to the fields of game theory, market design and experimental economics, and is known for his emphasis on applying economic theory to solutions for "real-world" problems. In 2012, he won the Nobel Memorial Prize in Economic Sciences jointly with Lloyd Shapley for the theory of stable allocations and the practice of market design. The topic of Professor Roth's lecture will be "Who Gets What and Why: The New Economics of Matchmaking and Market Design," also the topic of his most recent book. Books will be available for sale after the lecture. Reception following.

Repugnant transaction watch: IIT pupil tries to sell kidney to repay loan, but no takers for 'dalit organ'

Here's a story that is disturbing on several levels: IIT pupil tries to sell kidney to repay loan, but no takers for 'dalit organ'

"Short of options, Mahesh even began a search for a buyer for one of his kidneys.But he later told some friends that in the thriving black market for kidneys, people first asked a donor's caste.
Mahesh added, "I visited around five hospitals in Varanasi and Alwar. The doctors there informed me that no one would take my kidney as I am a dalit."

Barcelona GSE summerforum and BESLAB workshop on Theoretical and Experimental Macroeconomics in Universitat Pompeu Fabra. June 16-17, 2016.

Rosemarie Nagel sends the following announcment:

Conference: Barcelona GSE summerforum and BESLAB workshop on Theoretical and Experimental Macroeconomics in Universitat Pompeu Fabra. June 16-17, 2016. Keynote speakers are:  In-Koo Cho (University of Illinois at Urbana-Champaign) and Albert Marcet (ICREA-IAE and Barcelona GSE). The conference organizers are: John Duffy, University of Pittsburgh, Frank Heinemann, Technical University of Berlin, Rosemarie Nagel , ICREA-BGSE and Universitat Pompeu Fabra, and Shyam Sunder, Yale University. Deadline for submissions is Monday, February 29, 2016

Summer school:  9th Barcelona BESLab Experimental Economics Summer School in Macroeconomics in Universitat Pompeu Fabra, June 13-19, 2016. The summer school organizers and lecturers are: John Duffy, University of Pittsburgh Frank Heinemann, Technical University of Berlin, Rosemarie Nagel, ICREA and Universitat Pompeu Fabra, Shyam Sunder, Yale University, and guest lecturer Gabriele Camera (Chapman University, WWZ). The deadline for applications is Friday, April 8 2016.  

Maladaptive interviewing culture in some residency matches

Here's a paper that describes the high-pressure interviewing that goes on before the resident match for Radiation Oncology (and proposes that residency directors should behave better):

Taking “the Game” Out of The Match: A Simple Proposal
by Abraham J. Wu MD, Neha Vapiwala MD, Steven J. Chmura MD, PhD, Prajnan Das MD, MS, MPH, Roy H. Decker MD, PhD, Stephanie A. Terezakis MD and Anthony L. Zietman MD
in the International Journal of Radiation Oncology, Biology, Physics, 2015-12-01, Volume 93, Issue 5, Pages 945-948

"Holliday et al  (3)  conducted an anonymous survey in which medical students applying in Radiation Oncology reported experiencing “behaviors that conflict with written NRMP policies, either during or after interviews”  (3)  . Of those who responded, alarmingly high percentages perceived that the system can be “gamed” through actions ranging from a wink and a nod, embellished thank you notes and advocacy phone calls, all the way to overt promises and declarations of interest (the potentially disingenuous nature of which is disturbing in itself). Radiation Oncology is fortunate to attract über-competitive “top-seed” candidates with credentials that confer prestige and promise to our specialty's future  (4)  , but, it being such a competitive field, most candidates are applying to dozens of programs. Both programs and candidates have sought a way through the morass by essentially “prearranging” matches ahead of the Match deadline. Programs seek affirmation that the applicant will rank them first, and applicants, with the stress of an overwhelming process, are tying themselves into knots trying to let all the programs at which they interview feel that they will be ranking them number one. Many candidates have complicated decisions to make about their lives and genuinely do not know their program ranking until the last minute, but the pressure is on to “show their hand”  (5)  . First-year residents, when asked what it was that they found most stressful about the process, describe the subtle pressure that programs put them under “to declare” them as top of the list. The anxiety when applicants are obligated to “play the game” is immense, even cruel. An implicit requirement to declare a first-choice program may have significant practical consequences: an excellent applicant who declared a “first choice,” yet narrowly failed to match at that program, may have plummeted down the rank list of other programs unwilling to “waste” a high slot on him or her. Applicants may not be truthful in their post-interview communications (for example, telling multiple programs they are the first choice)—behavior that can never be condoned, but which the new norms incentivize. The report by Holliday et al confirms what we knew in our hearts: that the pendulum has indeed, insidiously, swung in this direction and that these behaviors are now regarded as the new normal rather than in any way deviant.
...
"From the perspective of the applicants, Jena et al  (10)  surveyed senior medical students at 7 US medical schools regarding post-interview communications with programs and uncovered that more than 85% of respondents reported communicating with programs, with nearly 60% notifying more than one program that they would rank it highly. Furthermore, students reported that programs indicated that they would be “ranked to match,” “ranked highly” (52.8%), or other similar suggestive euphemisms. Most worrisome is that nearly a quarter of applicants admitted that they altered their rank order list on the basis of these programmatic communications, and 1 in 5 who ranked programs according to these promises did not match at that program, despite ranking it first. 

Conference in Lund in June: Social choice (and matching)

Tommy Andersson writes:

The 13^th Meeting of the Society for Social Choice and Welfare will take place in Lund, Sweden, from June 28 to July 1, 2016. The Meeting is hosted by the Department of Economics at Lund University.  The conference website is http://www.nek.lu.se/en/scw16. In addition to submitted papers, there will be four plenary sessions:

·         Arrow Lecture: Hans Peters (Maastricht University)

·         Condorcet Lecture: Gabrielle Demange (Paris School of Economics)

·         Presidential Address: Claude d'Aspremont (Universite Catholique de Louvain)

·         Social Choice and Welfare Prize: Fuhito Kojima (Stanford University) and Parag Pathak (MIT)

The Program Chair is Tommy Andersson from the Department of Economics, Lund university. Submissions is open from December 1, 2015, and the deadline for submissions is February 15, 2016. NOTE that the deadline will not be extended. Papers can only be submitted electronically through Conference Maker at:

https://editorialexpress.com/cgi-bin/conference/conference.cgi?action=login&db_name=SCW2016

For any further enquiries please contact Tommy Andersson at tommy.andersson@nek.lu.se.

There will also be a mini-course the day before the conference starts (June 27). This mini-course is organized by The Arne Ryde Foundation. Invited speakers are:

·         Federico Echenique, Caltech

·         Lars Ehlers, University of Montreal

·         William Thomson, University of Rochester

For further information about the mini-course, please contact Bo Larsson at Bo.Larsson@nek.lu.se or visit the website of the mini-course:

https://sites.google.com/site/arnerydefoundation/home/upcoming-events/econdesign16

I hope to see many of you in Lund this summer!

Best regards,

Tommy Andersson on behalf of the Program Committee

Collectible cards used to sell razor blades in the 1930's: Al Roth, boxer born in 1913

Before search word advertising, there were collectible cards...

1938 Famous Prize Fighters : Al Roth #32, series of 50 boxing cards.

The FCC's upcoming 2016 Incentive Auction: SIEPR policy brief by Greg Rosston and Addrzej Skrzpacz

Moving from Broadcast Television to Mobile Broadband: The FCC’s 2016 Incentive Auction

Gregory Rosston, Andrzej Skrzypacz

 Download publication PolicyBrief-Dec16.pdf (143.25 KB)

Refugee resettlement as a matching problem in the NY Times

A lot of thought will be needed about how to customize matching tech to refugee resettlement, but a discussion may be beginning.

Here's the NY Times article: Ending the Refugee Deadlock By DALIBOR ROHACJAN. 29, 2016.

It seems motivated in part by this article in the Forced Migration Review:
Choices, preferences and priorities in a matching system for refugees
Will Jones and Alexander Teytelboym

Here's an earlier post of mine:
Thursday, September 3, 2015 Migrants aren't widgets: refugee resettlement is a matching problem, and here is my set of posts on refugees to date:  http://marketdesigner.blogspot.com/search/label/refugees 

Susan Athey on Why Do Technology Companies Hire Economists?

Why Do Technology Companies Hire Economists?

Susan Athey on Quora.

Paul Terasaki 1929-2016, transplant immunology pioneer

Here's his UCLA obit: Paul Terasaki, 86, transplant medicine pioneer, philanthropist, UCLA faculty member and alumnus.

Here is what I wrote about him in Who Gets What and Why:

"The test that determines how sensitized a patient is involves a nice story: it was invented by UCLA medical scientist Paul Terasaki, who also built a prosperous business to make those tests available. His is a remarkable American life and career: Born in California in 1929, he and his family were interned with other Japanese-Americans during WWII. In 2010 he donated $50 million to UCLA."
*******
An earlier post touched on his work:

Wednesday, June 6, 2012

Terasaki Medical Innovation award

Who Gets What and Why in Chinese, and in paperback (in Britain)--the magic of subtitles

 This picture is of Ivy Li's copy of Who Gets What--and Why in Chinese. I gather that the Chinese subtitle is about 'the shared economy.'

The subtitle on the British paperback version also changed from the hardback--publishers have their own magic...

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As it happens, there's a Stanford seminar on subtitles today at 4pm:
AFTERTHOUGHTS ON “FOR AN ABUSIVE SUBTITLING”

The evolution of kidney exchange--the operational side of market design

 Market design doesn't stop when the market opens, and it isn't all analytical--a lot of it is operational, with changes being called for as experience is accumulated. One of the big problems faced by all of the multi-hospital kidney exchange networks is that many proposed transplants don't go through.  For example, if a three way cycle is proposed and one of the proposed transplants isn't accepted, none of the three proposed transplants go through. Counted this way, initially only 15% of proposed transplants were realized, but changes in the way surgeons' preferences are elicited has now brought this nearer to 50%. ( It turns out it's not easy to elicit surgeons' preferences in advance, but we're making progress:)

Here's an account of some of the ongoing market design in kidney exchange, at the Alliance for Paired Donation.  The American Journal of Transportation has now made it open access, after naming it among the 10 "best of AJT 2015" articles.

Fumo, D.E., V. Kapoor, L.J. Reece, S.M. Stepkowski,J.E. Kopke, S.E. Rees, C. Smith, A.E. Roth, A.B. Leichtman, M.A. Rees, “Improving matching strategies in kidney paired donation: the 7-year evolution of a web based virtual matching system,” American Journal of Transplantation, forthcoming, Article first published online: 26 MAY 2015 | DOI: 10.1111/ajt.13337, http://onlinelibrary.wiley.com/doi/10.1111/ajt.13337/epdf

Abstract: Failure to convert computer-identified possible kidney paired donation (KPD) exchanges into transplants has prohibited KPD from reaching its full potential. This study analyzes the progress of exchanges in moving from ‘‘offers’’ to completed transplants. Offers were divided into individual segments called 1-way transplants in order to calculate success rates. From 2007 to 2014, the Alliance for Paired Donation performed 243 transplants, 31 in collaboration with other KPD registries and 194 independently. Sixty-one of 194 independent transplants (31.4%) occurred via cycles, while the remaining 133 (68.6%) resulted from nonsimultaneous extended altruistic donor (NEAD) chains. Thirteen of 35 (37.1%) NEAD chains with at least three NEAD segments accounted for 68% of chain transplants (8.6 tx/chain). The ‘‘offer’’ and 1-way success rates were 21.9 and 15.5%, respectively. Three reasons for failure were found that could be prospectively prevented by changes in protocol or software: positive laboratory crossmatch (28%), transplant center declined donor (17%) and pair transplanted outside APD (14%). Performing a root cause analysis on failures in moving from offer to transplant has allowed the APD to improve protocols and software. These changes have improved the success rate and the number of transplants performed per year.
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Here are the other "10 best" articles .
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It turns out that several of my papers in the past year were about kidneys, with a focus on operational issues:

      Anderson, Ross, Itai Ashlagi, David Gamarnik and Alvin E. Roth, “Finding long chains in kidney exchange using the traveling salesmen problem,” Proceedings of the National Academy of Sciences of the United States of America (PNAS), January 20, 2015 | vol. 112 | no. 3 | 663–668, http://www.pnas.org/content/112/3/663.full.pdf+html 

      Anderson, Ross, Itai Ashlagi, David Gamarnik, Michael Rees, Alvin E. Roth, Tayfun Sönmez and M. Utku Ünver, " Kidney Exchange and the Alliance for Paired Donation: Operations Research Changes the Way Kidneys are Transplanted," Edelman Award Competition, Interfaces, 2015, 45(1), pp. 26–42. http://pubsonline.informs.org/doi/pdf/10.1287/inte.2014.0766

     

Roth, Alvin E., “Transplantation: One Economist’s Perspective,” Transplantation, February 2015,  Volume 99 - Issue 2 - p 261–264. http://marketdesigner.blogspot.com/2015/02/an-economists-perspective-on.html

    

Fumo, D.E., V. Kapoor, L.J. Reece, S.M. Stepkowski,J.E. Kopke, S.E. Rees, C. Smith, A.E. Roth, A.B. Leichtman, M.A. Rees, “Improving matching strategies in kidney paired donation: the 7-year evolution of a web based virtual matching system,” American Journal of Transplantation, October 2015, 15(10), 2646-2654 http://onlinelibrary.wiley.com/enhanced/doi/10.1111/ajt.13337/ (designated one of 10 “best of AJT 2015”)

Boston Globe looks at school choice in Denver and New Orleans

In the Boston Globe, there's a nice story by Jeremy C. Fox that focuses on school choice in Denver and New Orleans and the work that IIPSC has done there: Denver’s unified school enrollments may offer Boston a lesson

"A few years ago, parents here faced a bewildering array of options when selecting their children’s schools. There were more than 60 enrollment systems within Denver Public Schools alone, and another set for the city’s charter schools, each with distinct timelines and applications.

The confusion discouraged many low-income families from choosing at all, while parents with greater resources took advantage of the complexity to “game the system” in their favor, residents said.

“It did not promote equity with families,” said Karen Mortimer, a Denver public education advocate. “If you were in the know, you got the better schools.”

But four years after the Mile-High City adopted a common enrollment system that provides one-stop shopping for traditional, charter, magnet, and innovation schools, parents praise the ease and convenience of finding the right match.

Interviews with Denver parents, educators, and community groups suggest that the city’s largely controversy-free adoption of unified enrollment offers lessons for Boston, where a similar proposal by Mayor Martin J. Walsh and school leaders has met with vehement opposition from some parents.
...
"Since Denver and New Orleans became the first US cities to unify enrollment in 2012, several other urban communities have followed.

Of about a dozen US cities that have attempted to adopt the system, half have stalled amid political conflicts, according to Neil Dorosin, executive director of the Institute for Innovation in Public School Choice, a nonprofit group that builds and implements school assignment systems."