Market Design by Nikhil Agarwal & Eric Budish (forthcoming in the Handbook of Industrial Organization)

 Here's an NBER working paper that will appear in the Handbook of Industrial Organization:

Market Design by Nikhil Agarwal & Eric Budish

NBER WORKING PAPER 29367,  DOI 10.3386/w29367,  October 2021

Abstract: "This Handbook chapter seeks to introduce students and researchers of industrial organization (IO) to the field of market design. We emphasize two important points of connection between the IO and market design fields: a focus on market failures—both understanding sources of market failure and analyzing how to fix them—and an appreciation of institutional detail.

"Section II reviews theory, focusing on introducing the theory of matching and assignment mechanisms to a broad audience. It introduces a novel “taxonomy” of market design problems, covers the key mechanisms and their properties, and emphasizes several points of connection to traditional economic theory involving prices and competitive equilibrium.

"Section III reviews structural empirical methods that build on this theory. We describe how to estimate a workhorse random utility model under various data environments, ranging from data on reported preference data such as rank-order lists to data only on observed matches. These methods enable a quantification of trade-offs in designing markets and the effects of new market designs.

"Section IV discusses a wide variety of applications. We organize this discussion into three broad aims of market design research: (i) diagnosing market failures; (ii) evaluating and comparing various market designs; (iii) proposing new, improved designs. A point of emphasis is that theoretical and empirical analysis have been highly complementary in this research"

Here's the first paragraph:

"Textbook models envision markets as abstract institutions that clear supply and demand. Real markets have specific designs and market clearing rules. These features affect market participants and their allocations in various ways – they determine the actions an agent can take, the incentives for taking those actions, the information environment, the interactions between agents’ actions, and, ultimately, the final allocation. Well-designed markets have rules that coordinate and incentivize behavior in ways that lead to desirable outcomes. But it is not a given that all markets have good design. The Market Design field studies these  rules in order to understand their implications, to identify potential market failures, and to remedy them by designing better institutions."

Economic warfare: how to staff it?

 The Financial Times has a story about how the UK Ministry of Defense runs an economic warfare unit, which needs to be staffed differently than other military specialties. (The U.S. armed forces have very limited ability to recruit people with specialized skills from civilian occupations, except for doctors and lawyers.)

Secretive MoD ‘banking’ unit helps UK wage economic warfare. Taskforce set up to disrupt Isis six years ago turns its attention to new ‘grey zone’ threats such as cyber  by Helen Warrell 

"A taskforce of former bankers and financiers is helping the UK military sharpen its skills in economic warfare as a bulwark against growing threats including terrorism, cyber attacks and disinformation campaigns.

"The secretive unit — established by Britain’s Ministry of Defence six years ago to disrupt Isis’ commercial activities in Iraq and Syria — is staffed by a handful of former City professionals with expertise in commodity markets and international money flows.

...

"The taskforce, made up predominately of reservists with City experience, has worked with special forces, intelligence agencies and the army’s 77th Brigade information warfare unit to weaken adversaries by limiting their access to finance. 

...

"Bankers are able to enter the armed forces in a number of ways, from applying for a post as a military “regular” through the army’s officer selection board and undergoing training at Sandhurst, to working more flexibly in pro bono roles.

"The MoD is also considering reforms to its policies on reservists, including relaxing age and fitness requirements and bringing in a new “lateral” entry regime which would allow industry experts to transfer directly into senior military ranks rather than working their way up the hierarchy.

“We’re really not trying to throw middle-aged bankers out of the back of aircraft [on military operations],” the taskforce member explained. “It’s about using their professional skills.”

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

See also 

Tuesday, December 1, 2020

The labor market that is the military: a report from the National Academies of Science, Engineering, and Medicine

Matching refugees to countries by Jesús Fernández-Huertas Moraga and Martin Hagen

 From the IZA World of Labor:

Can market mechanisms solve the refugee crisis? The combination of tradable quotas and matching would benefit host countries as well as refugees  by Jesús Fernández-Huertas Moraga and Martin Hagen

"Ever since the major inflow of refugees (the “refugee crisis”) in 2015 and 2016, there has been heated debate about the appropriate distribution of refugees in the EU. Current policies revolve around mandatory quotas, which disregard the preferences of EU members and refugees alike. This problem can be addressed with two market mechanisms. First, tradable quotas minimize the cost of asylum provision for host countries. Second, a matching system gives refugees more discretion over where they are sheltered. While this proposal is theoretically appealing, it has yet to be tested in practice."

"A vivid demonstration of free riding was the EU's response to the upsurge in irregular migration in 2015 and 2016. In each of the two years, the EU registered more than one million asylum applicants, mostly from Syria, Afghanistan, and Iraq. Their main points of entry into the EU were Greece and Italy, whose reception facilities were quickly overwhelmed. Other EU members showed little willingness to help them out. As refugees tried to make their way toward Western and Northern Europe, several states reacted with border closures. Hungary, Slovenia, and Austria, among others, even erected fences to keep asylum seekers from entering their territories.

"To tackle the escalating situation, the European Commission launched the European Agenda on Migration in May 2015 [1]. One of its main components was an emergency mechanism to relocate 160,000 asylum seekers from Greece and Italy to the rest of the EU. A distribution key specified a quota of refugees for each EU member, based on measures of reception capacity (mainly GDP and population size). For each relocated person, the receiving country was financially compensated with €6,000 from the EU budget. Several Eastern European countries staunchly opposed the mandatory quotas but were overruled in the Council. Partly reflecting their reluctance, only about 35,000 refugees were eventually relocated.

...

"How the mechanism works in detail

"The proposal can be divided into three stages: an initial allocation of quotas, a market for these quotas, and a matching system.

"Stage 1: Initial allocation of quotas

...

"Stage 2: Quota trading

...

"Stage 3: Matching refugees to countries

...

"In the final decision adopted by the Council, the Parliament's proposal was redacted to a one-sided matching mechanism that gave countries the possibility to express their preferences over refugees but not vice versa. Both on paper and in practice, the matching procedure was rather ad-hoc. A more systematic approach that incorporates insights from matching theory can improve the outcomes for refugees and countries alike.

"As envisioned by the European Parliament, a two-sided matching mechanism would allow refugees to rank EU members from most preferred to least preferred. Conversely, countries would rank different types of refugees, stratified according to family ties, language skills, education levels, and so on. This information would be collected and fed into a centralized algorithm, which would return an assignment of refugees to countries."

Luxembourg combats cannabis black markets by legalizing home cultivation

 Luxembourg is combatting cannabis black markets by ending the prohibition on home cultivation.

The Guardian has the story:

Luxembourg first in Europe to legalise growing and using cannabis. Relaxation is part of government rethink designed to keep users away from illegal market

"Adults in Luxembourg will be permitted to grow up to four cannabis plants in their homes or gardens under laws that will make it the first country in Europe to legalise production and consumption of the drug.

"The announcement on Friday by Luxembourg’s government was said to deliver fundamental changes in the country’s approach to recreational cannabis use and cultivation in light of the failure of prohibition to deter use.

...

"Justice minister Sam Tanson described the change to the law on domestic production and consumption as a first step.

...

“We want to start by allowing people to grow it at home. The idea is that a consumer is not in an illegal situation if he consumes cannabis and that we don’t support the whole illegal chain from production to transportation to selling where there is a lot of misery attached. We want to do everything we can to get more and more away from the illegal black market.”

Celebrate John Kagel, in Tucson, in person, Oct 28

 John H. Kagel Symposium

"On Thursday, October 28, 2021 we will be holding a workshop to celebrate John’s work and highlight his scientific contributions (same venue as ESA meetings). John’s path-breaking research has substantially enhanced the visibility and acceptance of experimental methods across the social sciences. For this occasion, Muriel Niederle and Al Roth have kindly agreed to be the keynote speakers. ...

The workshop is being organized by Andrzej Baranski (NYU Abu Dhabi), David Cooper (FSU), and Guillaume Frechette (NYU). Should you have any questions please contact Andrzej at a.baranski@nyu.edu.

Symposium Keynote Speakers: Alvin E. Roth, Muriel Niederle

Confirmed Speakers: Kirby Nielsen, Olivier Armantier, James Walker, Andrzej Baranski, Leeat Yariv, Dan Levin, Ed Fisher, Marco Cassari

Same sex marriage now legal in Switzerland, by popular referendum

 The BBC has the story (it happened last month, but I wasn't paying attention):

Switzerland same-sex marriage: Two-thirds of voters back yes

"Some 64% supported the measure, making it one of the last countries in western Europe to legalise same-sex marriage.

...

"In the build up to the vote, church groups and conservative political parties opposed the idea, saying it would undermine the traditional family.

"Switzerland has allowed same-sex couples to register partnerships since 2007, but some rights are restricted.

"The measure will make it possible for same-sex couples to adopt unrelated children and for married lesbian couples to have children through sperm donation.

"It makes Switzerland the 30th country in the world to adopt same-sex marriage.

...

"Justice Minister Karin Keller-Sutter said the first same-sex marriages would take place in July next year.

"Whoever loves each other and wants to get married will be able to do so, regardless of whether it is two men, two women, or a man and a woman," she said.

...

"Over the last 20 years, most countries in western Europe have recognised same-sex marriage. However, in Switzerland many big decisions go to a nationwide ballot, and this can slow down major changes to social legislation.

"The new law, which had the backing of the Swiss government and all major political parties except the People's Party, was passed by parliament in December."

Crime and punishment (or not): Shoplifting in San Francisco

 In a criminal justice system in which incarceration sometimes seems to be the treatment of choice, it makes some sense to pay less attention to small crimes. But incentives matter, and so do small crimes (particularly small crimes that can be aggregated by organized gangs into profitable businesses...).

The WSJ has the story:

San Francisco Has Become a Shoplifter’s Paradise. Walgreens has closed 22 stores in the city, where thefts under $950 are effectively decriminalized. By Jason L. Riley

"The recent closings bring to 22 the number of stores that Walgreens has shut in the city since 2016. “Theft in Walgreens’ San Francisco stores is four times the average for stores elsewhere in the country, and the chain spends 35 times more on security guards in the city than elsewhere,” reported the San Francisco Chronicle.

...

"Much of this lawlessness can be linked to Proposition 47, a California ballot initiative passed in 2014, under which theft of less than $950 in goods is treated as a nonviolent misdemeanor and rarely prosecuted. Out of concern for safety and potential lawsuits, stores tell employees and security guards not to intervene when they witness a crime. Most suspects, if they are pursued at all by police, are soon released. Californians effectively decriminalized shoplifting. Not surprisingly, they have more of it."

The Economist celebrates Milgrom and Wilson, and economic engineering

 The Economist has weighed in on the 2021 Nobel Prize in Economics:

The Nobel prize in economics rewards advances in auction theory. For the third time since 2007, it goes to designers of market mechanisms, Oct 17th 2020

"In 1991 Alvin Roth, who in 2012 would share the Nobel prize for economics, was asked how the discipline might change over the century to come. “In the long term”, he wrote, “the real test of our success will be not merely how well we understand the general principles which govern economic interactions, but how well we can bring this knowledge to bear on practical questions of microeconomic engineering.” Sweden’s Royal Academy of Science seems to agree. On October 12th it gave this year’s Nobel prize to Paul Milgrom and Robert Wilson, both of Stanford University, for their work on auction theory and design. Their work epitomises economics as engineering.

...

"The pursuit of economics as a form of engineering means that Messrs Milgrom and Wilson are more enmeshed in the real world than the typical academic. Both have consulted for regulators and firms. Mr Milgrom advised Time Warner and Comcast on their participation in radio-spectrum auctions in 2006; his efforts helped save his clients more than $1bn. In 2009 he co-founded a firm, Auctionomics, that provides consulting services to those looking to operate and to bid in auctions (many of the sort designed by the prizewinners).

"It is a different sort of work from that which many aspiring scholars imagine themselves to be pursuing. But the rewards the laureates have reaped in academia and beyond certainly advertise the power wielded by economic engineers."

Economics of organ transplants celebrated by Stanford GSB

 The Stanford GSB website has a long article celebrating the work at Stanford studying many aspects of kidney transplantation (kidney exchange, deceased donors, compensation), focusing particularly on the work of Mohammad Akbarpour, Paulo Somaini, and Stefanos Zenios at GSB, and connections to other Stanford faculty including Itai Ashlagi.

A Beautiful Application: Using Economics to Make Kidney Exchanges More Efficient and Fair.  Even modest improvements to organ exchange markets can save many lives. That’s where economists and operations experts come in. | by Dylan Walsh

Here's a line I liked:)

"The year was 2012. Akbarpour was a doctoral student taking a class with Alvin Roth, the legendary Stanford economics professor..."

Kidney failure is epidemic among agricultural workers in hot countries… so is likely to be exacerbated by global warming.

 When I visited the UAE this past summer, I learned that it has high rates of kidney failure, attributed to the very high temperatures that outdoor workers experience there. Here's a story that says that's a problem in other hot places, and therefore likely to get worse as the atmosphere heats up. It's a further reason why it makes sense to expand kidney exchange across borders, and not just among wealthy countries.

The Guardian has the story:

Global heating ‘may lead to epidemic of kidney disease’. Deadly side-effect of heat stress is threat to rising numbers of workers in hot climates, doctors warn  by Natalie Grover

"Chronic kidney disease linked to heat stress could become a major health epidemic for millions of workers around the world as global temperatures increase over the coming decades, doctors have warned.

"More research into the links between heat and CKDu – chronic kidney disease of uncertain cause – is urgently needed to assess the potential scale of the problem, they have said.

"Unlike the conventional form of chronic kidney disease (CKD), which is a progressive loss of kidney function largely seen among elderly people and those afflicted with other conditions such as diabetes and hypertension, epidemics of CKDu have already emerged primarily in hot, rural regions of countries such as El Salvador and Nicaragua, where abnormally high numbers of agricultural workers have begun dying from irreversible kidney failure.

"CKDu has also started to be recorded as affecting large numbers of people doing heavy manual labour in hot temperatures in other parts of Central America as well as North America, South America, the Middle East, Africa and India.

...

"Dr Ramón García Trabanino, a clinical nephrologist and medical director at El Salvador’s Centre of Hemodialysis, first noticed an unusual number of CKD patients saturating his hospital as a medical student more than two decades ago.

“They were young men,” he said, “and they were dying because we didn’t have the budget or the capacity to give them dialysis treatment. We did the best we could, but they kept dying and more kept coming.”

"Since then he has started researching similar epidemics in Mexico, Nicaragua, Costa Rica and Panama."

Janos Kornai (1928-2021)

 Peter Biro alerts me to the passing of Janos Kornai.

Renowned Economist Kornai Dies Aged 94

and here

Economist Janos Kornai dies

He was a bridge between East and West, between command economies and market economies.  Here's his Google Scholar page: Janos Kornai.

When I met him, he was spending half his time at Harvard and half back in Hungary.  At his retirement dinner from Harvard, someone asked him something along the lines of "what's the biggest difference between Hungary and the U.S.?" He answered that it was how people answered the question "How are you?"  In Hungary, he said, people told you of their complaints, but in the U.S., everyone gave you a big smile and said "I'm fine, how are you?"  He recounted how he thought the American answer was more cheerful, and that he would try to change the equilibrium in Hungary by answering like an American, when in Hungary.  But this didn't work, he said (which is the problem with equilibria...)  When he would reply that he was fine, the response he got was along the lines of "Of course you're fine, you live in the United States!"). So he resigned himself to the fact that equilibria are hard to change...

NBER Market Design Working Group Meeting, Fall 2021

Market Design Working Group Meeting, Fall 2021

DATE October 21-23, 2021 (Times in EDT)

ORGANIZERS Michael Ostrovsky and Parag A. Pathak

NBER conferences are by invitation. All participants are expected to comply with the NBER's Conference Code of Conduct.

Thursday, October 21

12:00 pm

Randomized FIFO Mechanisms 

Francisco Castro, UCLA

Hongyao Ma, Columbia University

Hamid Nazerzadeh, University of Southern California

Chiwei Yan, University of Washington

12:45 pm

The Value of Excess Supply in Spatial Matching Markets 

Mohammad Akbarpour, Stanford University

Yeganeh Alimohammadi, Stanford University

Shengwu Li, Harvard University

Amin Saberi, Stanford University

1:30 pm

Break

2:00 pm

Choices and Outcomes in Assignment Mechanisms: The Allocation of Deceased Donor Kidneys 

Nikhil Agarwal, Massachusetts Institute of Technology and NBER

Charles Hodgson, Yale University

Paulo J. Somaini, Stanford University and NBER

2:45 pm

Price Discovery in Waiting Lists: A Connection to Stochastic Gradient Descent 

Itai Ashlagi, Stanford University

Jacob D. Leshno, University of Chicago

Amin Saberi, Stanford University

Pengyu Qian, Columbia Business School

3:30 pm

Adjourn

Friday, October 22

12:00 pm

Linear Pricing Mechanisms without Convexity 

Paul Milgrom, Stanford University

Mitchell L. Watt, Stanford University

12:45 pm

The Equilibrium Existence Duality: Equilibrium with Indivisibilities and Income Effects 

Elizabeth C. Baldwin, University of Oxford

Omer Edhan, University of Manchester

Ravi Jagadeesan, Stanford University

Paul D. Klemperer, University of Oxford

Alexander Teytelboym, University of Oxford

1:30 pm

Break

2:00 pm

Flow Trading 

Eric Budish, University of Chicago and NBER

Peter Cramton, University of Cologne

Albert "Pete" Kyle, University of Maryland

Jeongmin (Mina) Lee, Washington University in St. Louis

David Malec, University of Maryland

2:45 pm

Designing a Combinatorial Financial Options Market 

Xintong Wang, Harvard University

David Pennock, Microsoft Research

Nikhil Devanur, Amazon

David M. Rothschild, Microsoft Research

Biaoshuai Tao, Shanghai Jiao Tong University

Michael Wellman, University of Michigan

3:30 pm

Adjourn

Saturday, October 23

12:00 pm

Choice Screen Auctions 

Michael Ostrovsky, Stanford University and NBER

12:45 pm

Mechanism Design meets Priority Design: Redesigning the US Army's Branching Process 

Kyle Greenberg, United States Military Academy at West Point

Parag A. Pathak, Massachusetts Institute of Technology and NBER

Tayfun Sönmez, Boston College

1:30 pm

Break

2:00 pm

Decentralizing Centralized Matching Markets: Implications from Early Offers in University Admissions  

Julien Grenet, Paris School of Economics

Yinghua He, Rice University

Dorothea Kübler, WZB

2:45 pm

Mechanism and Priority Design for Distributional Objectives: An Application to Decrease Inequalities in Access to Experienced Teachers 

Julien Combe, CREST - Ecole polytechnique

Umut M. Dur, North Carolina State University

Olivier Tercieux, Paris School of Economics

Camille Terrier, University of Lausanne

M. Utku Ünver, Boston College

3:30 pm

Adjourn

Challenge trials in Britain and (not) in the U.S.

 The NY Times has an excellent piece on Covid vaccine challenge trials, and the different traditions (and repugnance) in Britain and the U.S.

Britain Infected Volunteers With Covid. Why Won’t the U.S.? By Kate Murphy

"In an age of masking, compulsive hand sanitizing and plexiglass dividers, it seems inconceivable that for more than 40 years people enthusiastically signed up — and were often put on a waiting list — to have respiratory viruses, including coronaviruses, dripped into their noses.

"They were volunteers at the Common Cold Unit, set up in 1946 by the British government’s Medical Research Council.

...

"the Common Cold Unit established and refined a model for so-called human challenge studies that paved the way for the first Covid-19 human challenge study just completed in Britain, where young, healthy and unvaccinated volunteers were infected while researchers carefully monitored how their bodies responded.

"Then, as now, there were those who decried deliberately infecting or “challenging” healthy volunteers with disease-causing pathogens. It violates the medical principle of “do no harm.” The trade-off is a unique opportunity to discover the causes, transmission and progression of an illness, as well as the ability to more rapidly test the effectiveness of proposed treatments.

...

"“The key benefit of human challenge studies is that they are controlled — everyone gets the same virus, the same amount and they are in the same environment,” said Dr. Christopher Chiu, professor of infectious diseases at Imperial College London and chief investigator in Britain’s Covid challenge study.

...

"In the United States, the regulatory hurdles to conduct challenge studies mean there are precious few, mostly for finding better treatments for malaria, cholera and influenza. Ethicists and regulators are more comfortable approving clinical trials where subjects are given a treatment, say a drug or vaccine, to see if it helps improve a condition volunteers already have, or could prevent them from developing later.

...

"Dr. Fauci’s office said the institute has no plans to fund Covid-19 human challenge trials in the future. Many bioethicists support that decision. “We don’t ask people to sacrifice themselves for the good of society,” said Jeffrey Kahn, director of the Johns Hopkins Berman Institute of Bioethics. “In the U.S., we are very much about protecting individual rights and individual life and health and liberty, while in more communal societies it’s about the greater good.”

"But Josh Morrison, a co-founder of 1Day Sooner, which advocates on behalf of more than 40,000 would-be human challenge volunteers, argues it should be his and other people’s right to take risks for the greater good. “Most people aren’t going to want to be in a Covid challenge study, and that’s totally fine, but they shouldn’t project their own choices on other people,” he said."

HT: Axel Ockenfels

Paul Milgrom''s autobiography now available on the Nobel website

 Paul Milgrom's autobiography is now online, and well worth reading.  It's last line is 

"As Tennyson wrote in his poem Ulysses: “Some work of noble note may yet be done, not unbecoming men that strove with Gods.”

Paul R. Milgrom

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

Earlier:

Saturday, August 28, 2021

Bob Wilson's autobiography is now available on the Nobel Prize website

Unraveling of Forensic Psychiatry fellowships makes participants paranoid on both sides of the market

 Where lawyers speak naturally about rules, psychiatrists don't shy away from talking about feelings, and the current disorder in the market for forensic psychiatry fellowships is making many participants miserable.

The Fellowship Application Process Must Be Reformed  by Octavio Choi, Journal of the American Academy of Psychiatry and the Law Online September 2021, 49 (3) 300-310; DOI: https://doi.org/10.29158/JAAPL.210088-21

"These are unhappy days in the world of forensic psychiatry fellowship programs. Here is the crux of the problem: too much product, not enough customers. Agapoff and colleagues report that for the 2016–2017 academic year, forensic psychiatry fellowships achieved a 56 percent fill rate, with 65 residents spread over 44 programs offering a total of 116 positions.1 Since then, the number of forensic programs has continued to grow, up to 48 ACGME-accredited programs offering 127 positions in 2018–2019. Seventy-three of those positions were filled, equating to a 57.5 percent fill rate.2 Things were better in the older days. According to ACGME records, in 2012–2013 there were about the same number of active residents (70) in just 36 programs.3

"The implications are clear: forensic fellowship programs are increasingly desperate to recruit a small number of applicants. From the perspective of program directors such as me, the rational strategy to pursue in this situation is to identify promising applicants early and try to sign them up before anyone else can get to them. Indeed, in recent years, fierce competition has led programs to make earlier and earlier offers that are time-limited (also known as the “exploding offer”). Paranoia is high. Given the nontransparent nature of most transactions in the applications process (no one really knows what anyone else is up to), and lack of objective referees, it only takes the slightest hint of malfeasance for outrage and fear of missing out to amplify.

"The overriding fear of many program directors is that they will not fill their available positions. In addition to bruised egos, being left with open positions means contracts will be left unfilled, possibly leading to cancellation and, ultimately, reduction or elimination of programs. Literally, to not fill risks death (of the program). The imperative, then, is to avoid not filling at all costs.

"On the other side is a paradox. For applicants, low fill rates should translate into a buyer's market, yet because the market is unregulated, the current system inflicts much suffering on them. As one recent applicant succinctly described the process: “it's a hot mess.” Competition by programs for the limited number of applicants has led to earlier and earlier offers being made with shorter and shorter times to decide; too short to adequately assess and receive offers from other programs. Indeed, the whole point of an exploding offer, from the program's point of view, is to curtail assessment of other programs by forcing applicants to make decisions before they might otherwise be ready. In marketing parlance, the idea is to pick up a bargain by taking a good off the market before it can be fairly priced.

...

"The failure of the current system is not about program directors being bad people. It is about the fragile nature of voluntary agreements during difficult times. The math is simple. If each program director has a 95 percent chance of behaving ethically over the course of the applications cycle, and there are 48 programs, there is only a .95 to the forty-eighth power probability (=8.5% chance) that all 48 directors will behave ethically in any given year. A single program director acting less-than-fully ethically is enough to kickstart a paranoid feedback loop that devolves into chaos: “If program X isn't playing by the rules, I don't see why I need to keep playing by the rules, especially if it's going to hurt me.”

"But note that system failure does not even require any actual unethical behavior; all that is required is the perception that others are behaving unethically, a perception that is encouraged to flourish in the context of desperation and lack of transparency"

Market design in Tokyo

 Fuhito Kojima and Hiroaki Odahara report on some of the projects presently underway at the University of Tokyo Market Design Center (UTMD), which include matching for child care, for medical residencies, and for internal labor markets.

Kojima, F., Odahara, H. Toward market design in practice: a progress report. Japanese Economic Review, (2021). https://doi.org/10.1007/s42973-021-00103-w

Abstract: In recent years, many developments have been made in matching theory and its applications to market design. This paper surveys some selected topics from this research area and describe our own work. We also describe the newly established University of Tokyo Market Design Center (UTMD), which works as a vehicle for practical implementation.

Muriel Niederle receiving the Morgenstern Medal: intro and speech (video)

Here's the video of Muriel Niederle receiving her  2021 Oskar Morgenstern Medal.

Starting at minute 25:45 you can hear Jean Robert Tyran introducing Muriel and her work. She is honored for her work in market design and her studies of gender in economic environments. The introduction is well worth listening to.  Muriel's talk begins at minute 52, and is called "A Gender Agenda." (She begins by noting "A lot of economists are not female.")

The United Arab Emirates and the Alliance for Paired Kidney Exchange formalize their relationship

 From the Abu Dhabi Government Media Office, this Oct. 7 announcement:

SEHA, Alliance for Paired Kidney Donation Formalize Partnership to Promote Paired Kidney Donation

"Abu Dhabi Health Services Company, (SEHA), the UAE’s largest healthcare network, and Alliance for Paired Kidney Donation (APKD), a non-profit organization based in Ohio, U.S, have signed a Memorandum of Understanding (MoU) following their recent collective success in facilitating paired kidney donations.

"With both organizations sharing a common goal to elevate opportunities for donation and transplants for both local and international patients with kidney disease, this strategic agreement will see SEHA and APKD working closely together to build a paired kidney donation program in the UAE, as well as facilitate transplant opportunities for patients with kidney failure seeking the right match kidney from the UAE or abroad.

"Dr. Tarek Fathey, Group Chief Executive Officer, SEHA, said: “A fundamental element of our constant growth and development as SEHA is building fruitful partnerships and relationships with global pioneers. Collaborating with APKD strengthens our position to significantly add to the UAE’s healthcare ecosystem and will introduce ample opportunities for us to transform kidney care locally, regionally and internationally.”

"As part of the agreement, SEHA Kidney Care (SKC), part of the SEHA network and Abu Dhabi’s go-to for kidney disease and treatment, will benefit from the opportunity to engage in training modules in health information technology systems applications (including Kidney Match – APKD’s paired organ exchange software), develop educational and scientific research papers and studies, and the exchange of medical, technical, and administrative experience.

"Dr. Ali Al Obaidli, Chief Medical Officer, SKC & Chairman of the UAE National Transplant Committee, said: “The key to the success of paired kidney donations is collaboration, locally and internationally. Thankfully, in the UAE, we boast a robust foundation of healthcare stakeholders and partners who will be integral in the build and roll-out of such a program. Building on our support, we are pleased to formalize a long-term partnership with APKD – by strengthening our relationship, we are unlocking pathways into countries across the world that will facilitate life-saving solutions for kidney disease patients across the globe, as well as build and bolster a paired kidney program here in the UAE that will benefit our citizens and residents.”

The APKD provides a powerful matching platform... that works with governments and hospitals around the world to match living kidney donors with patients in need within and across borders.

On a recent visit to the UAE, ... Dr. Alvin Roth, said: “Kidney disease is a global problem that requires a global solution. The UAE, with its diverse population and solid healthcare infrastructure, is well positioned to lead the charge. ....”

Dr. Michael Rees, MD PhD, Chief Executive Officer, APKD, said: “.... We are thrilled to partner with the UAE’s largest healthcare network in efforts to elevate the country’s infrastructure to not only heal its residents, but to contribute to the global healthcare landscape in terms of cross-country paired donations and transplants and research.”

Kidney donation and the strange, viral story of the "Bad Art Friend"

 A short story about a kidney donor prompted a long article in the NY Times Magazine last week, and that article has gone viral. Here's the article:

Who Is the Bad Art Friend? Art often draws inspiration from life — but what happens when it’s your life? Inside the curious case of Dawn Dorland v. Sonya Larson.   By Robert Kolker

Here are some paragraphs that set the stage for the drama described in the article.

"On June 24, 2015, a year after completing her M.F.A. in creative writing, Dorland did perhaps the kindest, most consequential thing she might ever do in her life. She donated one of her kidneys, and elected to do it in a slightly unusual and particularly altruistic way. As a so-called nondirected donation, her kidney was not meant for anyone in particular but instead was part of a donation chain, coordinated by surgeons to provide a kidney to a recipient who may otherwise have no other living donor. 

...

"Several weeks before the surgery, Dorland decided to share her truth with others. She started a private Facebook group, inviting family and friends, including some fellow writers from GrubStreet, the Boston writing center where Dorland had spent many years learning her craft. After her surgery, she posted something to her group: a heartfelt letter she’d written to the final recipient of the surgical chain, whoever they may be."

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The NYT article goes on to tell a sad story about how some of the "fellow writers" took a dislike to the kidney donor, feeling that her good deed was inspired by nothing more than attention seeking.  One of them published a short fiction called "The Kindest," about just such a supposed donor (depicted as a racist or at least racially insensitive "white savior").  It contained a letter vey much like the one the real kidney donor shared.  Some but not all of the dispute that followed involves the question about whether this met the legal definition of plagiarism.

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This is a good place to (re)state my own view, as someone with a long interest in kidney exchange, that kidney donors, especially nondirected donors, are heroes whose donation does a world of good.  Thousands of kidney transplants have been facilitated by kidney exchange chains begun by nondirected donors.  I've met a number of such donors, and they seem to me to be by and large selfless people who did something wonderful that became a significant part of their lives, even though they don't generally regard themselves as heroes.

Listen to some of their stories here, in interviews of donors by a donor: Donor Diaries Podcast

Of course, they probably have to be a bit careful telling their stories, and discussions among donors might be safe spaces where they won't be misunderstood.  That's surely an experience that donors have in common with other people who have done or experienced something remarkable, such as military veterans who are Medal of Honor winners, and who give each other needed support when recognized as such.

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But how about art?

Here's a story in the New Yorker reviewing the short story described in the NY Times Magazine article. It asks whether the short story in question qualifies as the kind of art that might justify the liberties the author took.

The Short Story at the Center of the “Bad Art Friend” Saga.  A Times Magazine feature has prompted feverish discourse about the ethics of artistic appropriation. Is the art in question any good?  By Katy Waldman

"This raises the question of whether Larson did any better of a job exploiting Dorland’s kidney donation for personal gain, insofar as exploiting existing material for personal gain is a pretty good working definition of being a writer.

"By my reading, she did not. Larson lifted an extremely potent premise—the needy organ donor, seeking connection and validation—and crafted a story that manages to diminish its built-in intrigue. In fact, “The Kindest” falls short in precisely the ways the saga laid out in the Times Magazine piece might lead us to expect: it makes a cartoon of the donor character, and it over-relies on identity-inflected hand-waving. Also, the prose is bad."

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I don't know how much of a larger lesson is contained in all this, aside from the observation that even acts of great generosity can be viewed with suspicion, by those who are so inclined.  This may have something to do with why the efforts against black markets in kidneys have turned into an obsessive campaign against compensation for donors and  repugnance to any transactions that resemble rewarding donors for their generosity.

I think this is a shame. To put it another way, even if some donors were to be motivated by attention seeking, isn't it better for society if they seek attention by behaving heroically in such beneficial ways? (Just think about all the wasteful or destructive ways that attention seekers sometimes seek attention...)

I'm sticking to my view of donors as heroes. 

(I even have a paper about heroism and kidney donation:

Niederle, Muriel and Alvin E. Roth, “Philanthropically Funded Heroism Awards for Kidney Donors?, Law & Contemporary Problems, 77:3, 2014, 131-144.  )

Ryan Oprea wins the Exeter Prize for the paper "What Makes a Rule Complex?"

 The Exeter Prize Committee has circulated the cheerful announcement below, about the latest winner of that prize (which has a very distinguished history):

"We are happy to announce the winner of the 2021 Exeter Prize for the best paper published in the previous calendar year in a peer-reviewed journal in the fields of Experimental Economics, Behavioural Economics and Decision Theory.

"The winner is Ryan Oprea (University of California at Santa Barbara) for his paper “What Makes a Rule Complex”, published in The American Economic Review. 

"This paper offers a crisp experimental measurement of complexity. It offers a rich description of how complexity affects actual humans, which has tremendous potential for informing policy making as well as theoretical research across disciplines (from psychology, computer science, and cognitive science to economics). In the experiment the subjects are asked to implement various decision rules. Five dimensions of complexity are studied: the number of states and transitions, existence of absorbing states and redundant states, and a measure of working memory. The paper looks at three different measures of behaviour: the error rate, the implementation time, and the subjects' own willingness to pay to get the decision rule implemented by a computer. The experiment also measures how fast people learn various decision rules and how transferable this knowledge is. This paper offers a new impetus for research, getting us outside of our comfortable box of constrained optimization. This is a risky and challenging attempt, with a high upside potential.

"The winning paper was selected by the panel of Nina Mazar (Boston University), Rosemarie Nagel (ICREA-UPF-Universitat Pompeu Fabra), and Tomasz Strzalecki (Harvard University). "

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Here's the paper:

What Makes a Rule Complex?  AMERICAN ECONOMIC REVIEW, VOL. 110, NO. 12, DECEMBER 2020  (pp. 3913-51  "By Ryan Oprea*

"We study the complexity of rules by paying experimental subjects to implement a series of algorithms and then eliciting their willingness-to-pay to avoid implementing them again in the future. The design allows us to examine hypotheses from the theoretical “automata” literature about the characteristics of rules that generate complexity costs. We find substantial aversion to complexity and a number of regularities in the characteristics of rules that make them complex and costly for subjects. Experience with a rule, the way a rule is represented, and the context in which a rule is implemented (mentally versus physically) also influence complexity"

Natural experiments win a Nobel in Economics: Angrist, Card and Imbens

 Congratulations to David Card, Josh Angrist, and Guido Imbens. Natural experiments and their statistical analysis join laboratory experiments and randomized control trials in the pantheon of modern empirical tools in economics celebrated in Stockholm:

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2021 was divided, one half awarded to David Card "for his empirical contributions to labour economics", the other half jointly to Joshua D. Angrist and Guido W. Imbens "for their methodological contributions to the analysis of causal relationships."