Friday, October 17, 2008
New survey of matching by Sonmez and Unver
Allocation and Exchange of Discrete Resources: Matching Market Design for House Allocation, Kidney Exchange, and School Choice by Tayfun Sonmez and Utku Unver, forthcoming in the Handbook of Social Economics edited by Jess Benhabib, Alberto Bisin, and Matthew Jackson.
Thursday, October 16, 2008
Arrow in the Guardian on the financial crisis
Economists are accustomed to think of markets as being public goods, but Ken Arrow writes that they may have negative externalities if they increase asymmetric information, and generally make reliable understanding harder to come by:
"the root is this conflict between the genuine social value of increased variety and spread of risk-bearing securities and the limits imposed by the growing difficulty of understanding the underlying risks imposed by growing complexity."
"the root is this conflict between the genuine social value of increased variety and spread of risk-bearing securities and the limits imposed by the growing difficulty of understanding the underlying risks imposed by growing complexity."
Experiments in market design: financial bailout
NPR has followed up their earlier coverage of the Ausubel-Cramton reverse auction proposal with a brief story reporting on some experiments they are running with it: Can the Banks Cheat?
Hat tip to Steve Leider (an innovative experimenter and behavioral economist on the market this year:)
Hat tip to Steve Leider (an innovative experimenter and behavioral economist on the market this year:)
Wednesday, October 15, 2008
Market design that you can't refuse: Treasury switches to equity
The NY Times reports that the latest change of direction in the financial bailout was presented as an ultimatum by the Treasury to big banks: Drama Behind a $250 Billion Banking Deal
Tuesday, October 14, 2008
Peer to peer lending in the credit crunch
Alan Krueger, writing in the NY Times blog, notes that even borrowers with good credit are being moved by circumstance to some of the peer to peer lenders: In Credit Crisis, Some Turn to Online Peers for Cash
Sunday, October 12, 2008
Congestion fees: "Lexus lanes" considered in UK
The Telegraph reports that British traffic authorities are considering allowing motorists driving alone to pay to be allowed to drive in less crowded lanes previously reserved for high occupancy vehicles: 'Lexus lanes' could be trialled within two years .
The automobile association finds this repugnant:
"The plans were condemned by the AA.
"Our members oppose them, they don't want to pay to use hot lanes," a spokesman said. "Why should people have to fork out to avoid congestion?" "
The automobile association finds this repugnant:
"The plans were condemned by the AA.
"Our members oppose them, they don't want to pay to use hot lanes," a spokesman said. "Why should people have to fork out to avoid congestion?" "
Tipping--in restaurants
The NY Times reports on the history of how that aristocratic European institution became an American custom: Why Tip?
It was once widely regarded as a repugnant transaction:
"Ultimately, even those who in principle opposed the practice found themselves unable to stiff their servers. Samuel Gompers, who was president of the American Federation of Labor and a leading figure of the anti-tipping movement, admitted that he “followed the usual custom of giving tips.” "
Ben Franklin worried about it: "“To overtip is to appear an ass: to undertip is to appear an even greater ass,” Benjamin Franklin reportedly noted during his stint in Paris, and his quandary continues to vex American diners."
But eventually the custom caught on in America even as it waned it Europe.
It was once widely regarded as a repugnant transaction:
"Ultimately, even those who in principle opposed the practice found themselves unable to stiff their servers. Samuel Gompers, who was president of the American Federation of Labor and a leading figure of the anti-tipping movement, admitted that he “followed the usual custom of giving tips.” "
Ben Franklin worried about it: "“To overtip is to appear an ass: to undertip is to appear an even greater ass,” Benjamin Franklin reportedly noted during his stint in Paris, and his quandary continues to vex American diners."
But eventually the custom caught on in America even as it waned it Europe.
Kol Nidre: Contract law when your counterparty is omnipotent
Michael Weiss recounts in Slate how the Kol Nidre prayer , has changed over time.
Happy Hour
This story, from the Times of London, seems to combine at least two themes commonly encountered in legislation limiting repugnant transactions: Ministers to ban free drinks for women
E-retailing
The NY Times reviews some of the history of eBay and Amazon: Amid the Gloom, an E-Commerce War
Friday, October 10, 2008
Marriage Market--gay marriage legalized in CT
Conn. High Court Rules Gay Couples Can Marry
We are witnessing a transaction widely regarded as repugnant since Biblical antiquity being reassessed in light of modern ideas about equal protection under the law.
We are witnessing a transaction widely regarded as repugnant since Biblical antiquity being reassessed in light of modern ideas about equal protection under the law.
Market for economic advice (market failure)
This morning Peter Cramton and Larry Ausubel were on NPR talking about their reverse auction proposal, and The Chronicle of Higher Education writes about how little advice Congress got from economists on the financial rescue plans (i.e. not only how but what to buy, etc):
In Dismal Times, Economists Try to Shape Financial Debates (a permanent link for subscribers here)
Some quotes:
"Legislation drafted in haste and negotiated with recalcitrant partners is going to be bad legislation"
"Despite his frustrations with Congress, Mr. Galbraith says that he learned from watching his father for many years that it is important never to condescend to policy makers. “These are serious people, and you need to speak to them in a candid and serious way,” he says. “The question is not so much what economists need to say to policy makers, but what kind of policy education economists need in order to be able to intelligently understand the constraints that policy makers operate under.”
But one of the professors who joined Mr. Zingales in writing the anti-bailout petition takes a dimmer view of economists' efforts to speak directly into lawmakers' ears.
“The business of advice remains what it was,” says John H. Cochrane, a professor of finance at the University of Chicago. “You have to be willing become a sort of media person. You have to tailor your advice to what people want to hear, and then shade it a bit in the direction of common sense.” "
In Dismal Times, Economists Try to Shape Financial Debates (a permanent link for subscribers here)
Some quotes:
"Legislation drafted in haste and negotiated with recalcitrant partners is going to be bad legislation"
"Despite his frustrations with Congress, Mr. Galbraith says that he learned from watching his father for many years that it is important never to condescend to policy makers. “These are serious people, and you need to speak to them in a candid and serious way,” he says. “The question is not so much what economists need to say to policy makers, but what kind of policy education economists need in order to be able to intelligently understand the constraints that policy makers operate under.”
But one of the professors who joined Mr. Zingales in writing the anti-bailout petition takes a dimmer view of economists' efforts to speak directly into lawmakers' ears.
“The business of advice remains what it was,” says John H. Cochrane, a professor of finance at the University of Chicago. “You have to be willing become a sort of media person. You have to tailor your advice to what people want to hear, and then shade it a bit in the direction of common sense.” "
Online advertising--Ben Edelman
Securing Online Advertising: Rustlers and Sheriffs in the New Wild West
There's a lot of fraud in online advertising, in all the directions you can think of and some you probably haven't. Here's the paper.
I nominate Ben Edelman for Sheriff.
There's a lot of fraud in online advertising, in all the directions you can think of and some you probably haven't. Here's the paper.
I nominate Ben Edelman for Sheriff.
Thursday, October 9, 2008
Electric Car Stations in Hawaii
How can you enact a move from a gas station based fueling grid to an electric charging station based grid? Easy - start on an island. Behind this effort is Better Place, a California based start up with a vision of creating a network of charging stations for electric cars.
"California-based company Better Place will operate the stations on a subscription-based system. Owners could sign-up for a monthly plan or choose to pay as they use. The company will own the batteries, which can run upwards to $11,000, and loan them out to drivers."
http://gas2.org/2008/10/07/hawaii-to-get-electric-car-battery-sharing-program/
"California-based company Better Place will operate the stations on a subscription-based system. Owners could sign-up for a monthly plan or choose to pay as they use. The company will own the batteries, which can run upwards to $11,000, and loan them out to drivers."
http://gas2.org/2008/10/07/hawaii-to-get-electric-car-battery-sharing-program/
Organs for transplantation
The Economist has a good article summarizing The gap between supply and demand for transplantable organs around the world, and the various ways in which organs are and have been obtained, and some of the factors that get in the way of increasing supply.
The article has a table that makes the often overlooked point that the U.S. has very high donation rates of both live and deceased donor organs compared to most other countries*, despite having an opt-in system (you aren't a donor unless you (or your next of kin) says you are). But the shortage persists...
*The U.S. has the second highest live donor rate after Iran, which has a market for kidneys, and second highest deceased donor rate after Spain. When I spoke about kidney exchange at the Barcelona Clinic in 2004, the transplant coordinators there attributed their success to the professionalization of the job of acquiring deceased donor organs.
hat tip to Juan Camilo Cardenas
The article has a table that makes the often overlooked point that the U.S. has very high donation rates of both live and deceased donor organs compared to most other countries*, despite having an opt-in system (you aren't a donor unless you (or your next of kin) says you are). But the shortage persists...
*The U.S. has the second highest live donor rate after Iran, which has a market for kidneys, and second highest deceased donor rate after Spain. When I spoke about kidney exchange at the Barcelona Clinic in 2004, the transplant coordinators there attributed their success to the professionalization of the job of acquiring deceased donor organs.
hat tip to Juan Camilo Cardenas
Auctions for airline takeoff and landing slots, continued
Feds Go Forward With NYC Airport Experiment
Plans for slot auctions at LaGuardia, Kennedy, and Newark continue, but it sounds like the fight is far from over.
"Federal transportation officials say much of the reason for nationwide flight delays is that airlines have tried to cram too many planes -- and too many small planes -- onto New York runways, and the overscheduling just isn't realistic.
To fix that, they have capped the number of flights coming into or out of those airports, and now intend to auction off a fraction of those coveted slots to airline bidders. An auction, they say, will use market forces of supply and demand to make the flight schedule more efficient."
...
" Critics of the plan are furious.
''It is simply shocking that the DOT is unabashedly continuing this ideological battle despite the staunch opposition from the entire aviation community and the independent finding that the DOT lacks the power under the law to implement the proposal in the first place,'' Sen. Charles Schumer, D-N.Y., said in a statement."
Plans for slot auctions at LaGuardia, Kennedy, and Newark continue, but it sounds like the fight is far from over.
"Federal transportation officials say much of the reason for nationwide flight delays is that airlines have tried to cram too many planes -- and too many small planes -- onto New York runways, and the overscheduling just isn't realistic.
To fix that, they have capped the number of flights coming into or out of those airports, and now intend to auction off a fraction of those coveted slots to airline bidders. An auction, they say, will use market forces of supply and demand to make the flight schedule more efficient."
...
" Critics of the plan are furious.
''It is simply shocking that the DOT is unabashedly continuing this ideological battle despite the staunch opposition from the entire aviation community and the independent finding that the DOT lacks the power under the law to implement the proposal in the first place,'' Sen. Charles Schumer, D-N.Y., said in a statement."
Adoption in Korea
Korea Aims to End Stigma of Adoption and Stop ‘Exporting’ Babies
"Daunted by the stigma surrounding adoption here, Cho Joong-bae and Kim In-soon delayed expanding their family for years. When they finally did six years ago, Mr. Cho chose to tell his elderly parents that the child was the result of an affair, rather than admit she was adopted."
"Daunted by the stigma surrounding adoption here, Cho Joong-bae and Kim In-soon delayed expanding their family for years. When they finally did six years ago, Mr. Cho chose to tell his elderly parents that the child was the result of an affair, rather than admit she was adopted."
Market for political ads
A NYT story about presidential political ads caught my eye with the following observation about the fact that ads also garner free media:
"The ad showcased another ad strategy employed by both campaigns -- it was running only on national cable, a relatively inexpensive way of drawing media attention to an issue."
"The ad showcased another ad strategy employed by both campaigns -- it was running only on national cable, a relatively inexpensive way of drawing media attention to an issue."
Tuesday, October 7, 2008
Prediction markets--history
Historical Political Futures Markets: An International Perspective by Paul W. Rhode, Koleman Strumpf - #14377 (DAE)
Abstract:
Political future markets, in which investors bet on election outcomes, are often thought a recent invention. Such markets in fact have a long history in many Western countries. This paper traces the operation of political futures markets back to 16th Century Italy, 18th Century Britain, and 19th Century United States. In the United States, election betting was a common part of political campaigns in the antebellum period, but became increasingly concentrated in the organized futures markets in New York City over the postbellum period.
http://papers.nber.org/papers/W14377
Abstract:
Political future markets, in which investors bet on election outcomes, are often thought a recent invention. Such markets in fact have a long history in many Western countries. This paper traces the operation of political futures markets back to 16th Century Italy, 18th Century Britain, and 19th Century United States. In the United States, election betting was a common part of political campaigns in the antebellum period, but became increasingly concentrated in the organized futures markets in New York City over the postbellum period.
http://papers.nber.org/papers/W14377
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