Saturday, October 31, 2009

Market design in science fiction

Stephen Weinberg, a well read economist at University of Albany (which I still think of as SUNY Albany), sends me the following email:

"I hope you're doing well. I've been greatly enjoying your mechanism design blog.

I'm not sure if you like science fiction, but if so, I thought you'd be amused to know that a recent scifi novel includes a plot point based around mechanism design. The novel is
Eye of the Storm by John Ringo.

The basic gist is that, in previous books, the US had to create a humongous army to fight off an alien invasion. It then dropped down to only nominal force levels for a few decades (during which the ex-soldiers didn't age because of "rejuv" technology). Now they need to quickly create a new army, so to start with they've called up enough soldiers for a couple of divisions. The mechanism design part is that they decide to staff the divisions by letting officers use points to bid on their positions and subordinates. Some of the more talented officers decide to collude to game the system.

I've gone ahead and copied in the relevant chapters, in case you find it amusing. "

If I could have figured out how to create an "after the jump" break on this blogger I would have included the long, interesting excerpts Stephen included, which, among other things, had sniping in a combinatorial auction as a critical strategy.


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Unknown said...

It's also notable that there were teams of persons behind the scenes ensuring that the final outcome met the criteria they had decided upon in advance.

But the concept was based upon allowing persons who had to be motivated in their intentions (military officers and NCOs) yet were in a condition of low-motivation (returned to service in general unwillingly) a condition of marginal control over their assigment. This was also based upon each of their perceived 'value' to the overall system. Points were awarded based upon their previous service experience and indications of functional merit (battles successfully won or lost, medals and commands).

Hasdrubal said...

The auction was probably my favorite part of the book, it was a novel answer to the question of how to integrate a large number of conscripts quickly and effectively.

What struck me most was that the design of the auction encouraged collusion: Individuals received an endowment with which to bid based upon their prior military performance, but they could transfer that to others or combine bids. All the participants were encouraged to communicate their intentions with each other as well.

My first reaction was that that's going to lead to an inefficient outcome due to collusion. But then, the goal was to build teams. The slots in a table of organization being auctioned off weren't valuable in and of themselves. The team of people created by filling those slots was the important thing and a group that can collude well together is possibly going to perform better as a team than a group created by an efficient allocation of bids.

And you have to give Ringo credit, this auction was a great contrast to another method of answering the same question he used in another book, calling people up and assigning them based upon an ability matrix administered by a government bureaucracy.

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