Lectures on equilibrium in markets for indivisible goods at U. Tokyo by Teytelboym, Baldwin and Jagadeesan, Sept 21-24

 Towards a general theory of markets with indivisible goods: special lectures at The University of Tokyo Market Design Center (UTMD)

September 21-24, 2021 (Japan time) 

Organizers:

Fuhito Kojma, Director, UTokyo Market Design Center, and Professor, the University of Tokyo

Michihiro Kandori: Vice Director, UTokyo Market Design Center, and University Professor, the University of Tokyo

Yuichiro Kamada: Associate Professor, UC Berkeley, and Global Fellow, the University of Tokyo

Venue: Zoom online  Language: English

Program

*All times shown below are Japan time.

*Each lecture will be followed by 30 minutes Q&A session.

Lecture 1 9/21 (Tue) 16:00-17:30

Introduction to Markets for Indivisible Goods (by Alexander Teytelboym)

In many settings, such as auctions, the indivisibility of goods is a key market feature. But in markets with indivisible goods, competitive equilibria might not exist.  We explore conditions, such as substitutability of goods, that ensure existence of competitive equilibria. We also discuss connections between conditions for existence, tâtonnement, and cooperative properties of equilibria.

Lecture 2 9/22 (Wed) 16:00-17:30

The geometry of preferences: demand types, equilibrium with Indivisibilities, and bidding languages (by Elizabeth Baldwin)

An equivalence theorem between geometric structures and utility functions allows new methods for understanding preferences. Our classification of valuations into “Demand Types”, incorporates existing definitions regarding the comparative statics of demand (substitutes, complements, “strong substitutes”, etc.) and permits new ones. Our Unimodularity Theorem generalises previous results about when competitive equilibrium exists for any set of agents whose valuations are all of a “demand type”. Contrary to popular belief, equilibrium is guaranteed for more classes of purely-complements, than of purely-substitutes, preferences. Our Intersection Count Theorem checks equilibrium existence for combinations of agents with specific valuations by counting the intersection points of geometric objects. Applications include the “Product-Mix Auction” introduced by the Bank of England in response to the financial crisis. In that context, we show that all substitutes preferences can be represented, and no other preferences can be represented, by appropriate sets of permitted bids in the Substitutes Product-Mix Auction language; an analogous result holds for strong substitutes, when we refine the characteristics of the language. These languages thus also provide new characterizations of (all) substitutes, and of strong substitutes, respectively.

Lecture 3 9/23 (Thu) 16:00-17:30 The Equilibrium Existence Duality (by Alexander Teytelboym)

We show that, with indivisible goods, the existence of competitive equilibrium fundamentally depends on agents’ substitution effects, not their income effects. Our Equilibrium Existence Duality allows us to transport results on the existence of competitive equilibrium from settings with transferable utility to settings with income effects. One consequence is that net substitutability—which is a strictly weaker condition than gross substitutability—is sufficient for the existence of competitive equilibrium. Further applications give new existence results beyond the case of (net) substitutes. Our results have implications for auction design.

Lecture 4 9/24 (Fri) 09:30-11:00 Matching and Prices (by Ravi Jagadeesan)

Indivisibilities and budget constraints are pervasive features of many matching markets. But gross substitutability — a standard condition on preferences in matching models — typically fails in such markets. To accommodate budget constraints and other income effects, we instead assume that agents’ preferences satisfy net substitutability. Although competitive equilibria do not generally exist in our setting, we show that stable outcomes always exist and are efficient. We illustrate how the flexibility of prices is critical for our results. We also discuss how budget constraints and other income effects affect the properties of standard auction and matching procedures, as well as of the set of stable outcomes.

  Recorded lecture will be posted on UTMD’s YouTube channel within 6 hours.

 

David Grether, 1938-2021

 David Grether, a pioneer in experimental economics at Caltech has died.

Here's the initial Caltech announcement, promising more to come: 

David Grether, Caltech Frank Gilloon Professor of Economics, Emeritus, passed away on September 12. He was 82.

The paper of his that I remember best (and that I have taught whenever I cover preference reversals) is his incentivized replication of the preference reversals first noticed in hypothetical choice psychology experiments:

Grether, David M., and Charles R. Plott. "Economic theory of choice and the preference reversal phenomenon." The American Economic Review 69.4 (1979): 623-638.

Here are the papers he listed prominently on his web page:

SELECTED PUBLICATIONS

"Mental Processes and Strategic Equilibration: An fMRI Study of Selling Strategies in Second Price Auctions" with C. Plott, D. Rowe, M. Sereno and J. Allman Experimental Economics Vol. 10 (2007) pp. 105-122

Sequencing strategies in large, competitive, ascending price automobile auctions: An experimental study with Charles R. Plott  Journal of Economic Behavior and Organization Vol. 71 (2009) pp.75-88 http://dx.doi.org/10.1016/j.jebo.2009.02.018

The preference reversal phenomenon: Response mode, markets and incentives, with James Cox. Economic Theory 7 (1996): 387-405.

Individual behavior and market performance. American Journal of Agricultural Economics 76 (1994): 1079--1083.

Are people Bayesian? Uncovering behavioral strategies, with Mahmoud A. El-Gamal. Journal of the American Statistical Association 90 (1995): 1127-1145.

School choice in Latin America, in BBC News Mundo

 A news story with an unusually detailed account of school choice algorithms discusses some of the issues in Latin America, in Spanish, in BBC News Mundo. (Google translate does an adequate job...).  One of the issues discussed is that geographic priorities for schools give wealthier families an advantage, and perpetuate geographic segregation.

Qué es el Mecanismo de Boston y por qué expertos denuncian que hay segregación en las asignaciones de escuelas en América Latina  Analía Llorente  BBC News Mundo

[G translate: What is the Boston Mechanism and why experts denounce that there is segregation in school assignments in Latin America]

Some snippets:

"The Boston mechanism allows for a lot of parenting strategy and that means that it generates a lot of inequalities " [says] Paula Jaramillo, Associate Professor in Economics at the Universidad de los Andes in Colombia

...

"The criticism is against the Boston Mechanism because it continues to be applied, but it is also against the deferred acceptance method because it is generating segregation at the neighborhood level," says Caterina Calsamiglia, a leader in the investigation of these methods.

"The specialist refers to the fact that a student obtains more points for his proximity to the preferred school, therefore he has a greater chance of being admitted to it.

"This creates one of the main strategies is the moving neighborhood, decision can only carry out families with middle income to high, creating inequality."

...

"In many places in Latin America the selection method is not even regulated, and where it is, they are not very transparent with parents in communicating the methods.

"We know a lot about what is done by cities in the United States, in Europe, in Asia, we don't know so much about Latin America," says Paula Jaramillo.

...

"In conclusion, the experts believe that there is no magic method that can be applied uniformly in the countries of the region to avoid segregation and inequality in school selection.

"They agree that the deferred acceptance method is the "fairest" but not perfect. There are many factors to take into account from the quality of the schools to their location."

Market design (I talk to the entering Ph.D. class at Escola Nacional de Administração Pública)

 Yesterday I gave what I think was the first lecture to the entering class of Ph.D. students at the Escola Nacional de Administração Pública (ENAP) in Brasilia.  I spoke about market design, using as my main examples school choice and kidney exchange.  Afterwards there was Q&A on a variety of subjects, including black markets and repugnance.

Here's a video (I start to speak around minute 8):

Compatible pairs are (slowly) benefitting from kidney exchange

 Two articles forthcoming in the American Journal of Tranplantation consider the slowly increasing use of kidney exchange by compatible pairs (which is a good thing, but has been a long time in coming).  Compatible pairs can get better-matched kidneys through exchange (which has long term benefits), and because compatible pairs are largely easy to match, they additionally help create matches for hard to match pairs.

Motivations and outcomes of compatible living donor-recipient pairs in paired exchange, by Valerie Chipman, Matthew Cooper, Alvin G. Thomas, Matthew Ronin, Brian Lee, Stuart Flechner, David Leeser, Dorry L. Segev, Didier A. Mandelbrot, Tyler Lunow-Luke, Shareef Syed, Garet Hil, Chris E. Freise, Amy D. Waterman, Garrett R. Roll  First published: 01 September 2021 https://doi.org/10.1111/ajt.16821

This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the Version of Record. Please cite this article as doi:10.1111/ajt.16821

Abstract: Increasing numbers of compatible pairs are choosing to enter paired exchange programs, but motivations, outcomes, and system-level effects of participation is not well described. Using a linkage of the SRTR and National Kidney Registry, we compared outcomes of traditional (originally incompatible) recipients to originally compatible recipients using the Kaplan-Meier method. We identified 154 compatible pairs. Most pairs sought to improve HLA matching. Compared to the original donor, actual donors were younger (39 vs. 50 years, p<0.001), less often female (52% vs. 68%, p<0.01), higher BMI (27 vs 25 kg/m², p=0.03), less frequently blood type O (36% vs. 80%, p<0.001), and had higher eGFR (99 vs. 94 mL/min/1.73 m², p=0.02), with a better LKDPI (median 7 vs. 22, p<0.001). We observed no differences in graft failure or mortality. Compatible pairs made 280 additional transplants possible, many in highly sensitized recipients with long wait times. Compatible pair recipients derived several benefits from paired exchange including better donor quality. Living donor pairs should receive counseling regarding all options available including kidney paired donation. As more compatible pairs choose to enter exchange programs, consideration should be given to optimizing compatible pair and hard-to-transplant recipient outcomes.

***************

Rethinking incompatibility in kidney transplantation  Kyle R. Jackson, Dorry L. Segev

First published: 31 August 2021 https://doi.org/10.1111/ajt.16826

This article has been accepted for publication and undergone full peer review but has not been through the copyediting, typesetting, pagination and proofreading process, which may lead to differences between this version and the Version of Record. Please cite this article as doi:10.1111/ajt.16826

Abstract: Donor/recipient incompatibility in kidney transplantation classically refers to ABO/HLA-incompatibility. Kidney paired donation (KPD) was historically established to circumvent ABO/HLA-incompatibility, with the goal of identifying ABO/HLA-compatible matches. However, there is a broad range of donor factors known to impact recipient outcomes beyond ABO/HLA-incompatibility, such as age and weight, and quantitative tools are now available to empirically compare potential living donors across many of these factors, such as the living donor kidney donor profile index (LKDPI). Moreover, the detrimental impact of mismatch at other HLA antigens (such as DQ) and epitope mismatching on post-transplant outcomes has become increasingly recognized. Thus, it is time for a new paradigm of incompatibility that considers all of these risks factors together in assessing donor/recipient compatibility and the potential utility for KPD. Under this new paradigm of incompatibility, we show how the LKDPI and other tools can be used to identify donor/recipient incompatibilities that could be improved through KPD, even for those with a traditionally ‘compatible’ living donor.

A living kidney donor podcast by Ned Brooks

 Here's a link at which you can hear Ned Brooks, on the latest episode of Donor Diaries. 

"Ned is a high-profile activist for living kidney donation and the founder of The National Kidney Donors Organization.  Ned’s appearance on Freakonomics podcast and his TEDx Talk on living kidney donation are often mentioned by living kidney donors as an early inspiration for their donation."  

https://www.donordiaries.com/episodes

David Cooper to lead Econ at Iowa

 Iowa celebrates David Cooper as new head of Economics. (Iowa was a leading department in experimental economics, in the early days of experiments in economics).

Experimental economist David J. Cooper is new head of Tippie Department of Economics

"David J. Cooper, a leading researcher and widely published author in experimental economics, is the new departmental executive officer for the Department of Economics at the Tippie College of Business.

"Cooper, 54, comes to Iowa after 14 years on the faculty of the Florida State University College of Social Sciences and Public Policy. He has been the director of Florida State’s experimental social sciences cluster since 2011.

Amy Kristof-Brown, dean of the Tippie College of Business, says Cooper’s scholarly record as an experimental economist and his administrative experience running Florida State’s experimental social sciences cluster stood out.

...

"Cooper says that Tippie’s Department of Economics was one of the top 25 in the nation when he was in graduate school, and he said he is eager to lead a department that once produced such legendary economists as Frank Knight, Edward Chamberlin, and Howard Bowen, who would go on to become president of the University of Iowa.

“My goal is to build a cohesive group of researchers and give the department the recognition it once had,” he says."