Showing posts with label market designers. Show all posts
Showing posts with label market designers. Show all posts

Sunday, December 3, 2023

Photos from the daily market design activity at Stanford

Two photos remind me of the day to day market design activity at Stanford. 

Tinglong Dai joined our Wednesday market design coffee and sent along this picture. (You can see who came by plane and who came by bike...)  He wrote about his visit here.


And Matias Cersosimo successfully defended his dissertation on Friday, which  included market design experiments like this one.



 Welcome to the club, Matias.

Tuesday, August 15, 2023

Affirmative action in Brazilian universities: guest post by Inácio Bó

 Recent legislation in Brazil addresses university admissions with affirmative action that targets multiple characteristics that individuals may have (in different combinations), namely income, ethnicity, and the type of institution at which they studied. Early attempts to implement such a system produced undesirable outcomes, but recent legislation, informed by market design, is on the path to correcting this. Below, Inácio Bó brings us up to date:

Guest blog post by Inácio Bó

For many decades, Brazilian’s federal universities were—and still are— the top higher education institutions in the country. They had, however, a contradictory combination of circumstances: all of them were public-funded and tuition-free, but their students were overwhelmingly from a minority white higher socio-economic class. In response to that, in 2012 congress passed legislation mandating affirmative action in the access of all such institutions.

Orhan Aygün and I were at that time classmates pursuing our PhD in economics at Boston College. We spent days and weeks looking at the details of the structure of the rules for implementing the law, trying to better understand it. While working on some examples, we noticed that there could in principle be situations that were at odds with the intended objective of the law. Under some circumstances, black and low-income candidates would be rejected from positions where white and high-income candidates would be accepted, despite the former having higher entry-level exam grades than the latter. This  would be an outcome that goes in the opposite direction from the intended objective of helping black and low-income students attend these institutions.

The reason for this problem lies on the method used for implement the affirmative action law in the universities. Seats in each program in each university were split into groups of seats, including “open seats”, “black candidates”, “low-income candidates”, and “black and low-income candidates”. When applying for a program, a candidate would choose one of the alternatives for which she is eligible. The top candidates among those applying for each set of seats, ranked by their grade in a national exam, would be accepted. This method might, however, result in different levels of competition for different seats in the same program, resulting for example in tougher requirements for acceptance for “black and low-income” candidates than for “black” candidates, even if on average low-income candidates have lower grades overall.

In a paper published in the AEJ:Micro in 2021 (Aygün, Orhan, and Inácio Bó. 2021. "College Admission with Multidimensional Privileges: The Brazilian Affirmative Action Case." American Economic Journal: Microeconomics, 13 (3): 1-28.), we showed how this problem can be solved while still satisfying the text and spirit of the affirmative action law in Brazil with small changes in the way by which candidates are selected. (The idea is to order slot-specific priorities so that candidates with protected characteristics can compete for all of those slots for which their characteristics qualify them.) The paper also shows “smoking gun” evidence that these “unfair rejections” were taking place, showing that programs where the cutoff grades for acceptance for each subset of seats were compatible with these rejections constituted almost half of the programs offered across the nation.

While the article gained praise in the academic economic community, our hopes that it would reach the policymakers in Brazil were initially dashed. Despite having the chance of personally visiting the Ministry of Education in 2015 for two weeks, my attempts to talk with those in power were unsuccessful, and people to whom I explained some of our findings deemed its contents “critical of the government”.

 Especially in light of the political developments that took place in Brazil in the years that followed, I had mostly moved on from my hopes of seeing the changes we proposed being implemented.

Things started to change, however, around May of 2022. The staff from the office of representative Tábata Amaral, who is a prominent young politician with a focus on education, were having talks with Ursula Mello, now a professor at the Department of Economics at PUC-Rio in Rio de Janeiro, about some aspects of the affirmative action law related to her work. Given her knowledge about the AEJ:Micro paper, Ursula suggested that I join the discussions. A meeting where this happened even ended up in the press (https://www1.folha.uol.com.br/educacao/2022/05/pesquisadores-defendem-novo-algoritmo-no-sisu-para-nao-prejudicar-cotistas.shtml).

Adriano Senkevics, her co-author in related papers who works at the INEP—an agency connected to the Brazilian Ministry of Education in charge of evaluating educational systems—also joined.

In these discussions, it became clear that if we wanted our ideas to have any chance of gaining traction, we needed to write a policy-oriented paper, focused on the current Brazilian specifics, in Portuguese, and with policy-makers as the audience—not academics.

Adriano and I worked together in that project, now with a much more detailed dataset. We tailored the proposal to the updated law, which also included reservations for candidates with disabilities, and were finally able to quantify the negative impact of the failures we identified. Our estimates indicate that, in the selection process of 2019, at least ten thousand students were “unfairly rejected” from their applications, with more than 8 thousand being left unmatched to any university despite having an exam grade high enough to be accepted for less restrictive reserved seats. These numbers greatly exceeded our expectations, and made a clear political case for a change. The working paper went out in January of 2023 (“Proposal to change the rules for the occupation of quotas in the student entrance to federal institutions of higher education,” by Inácio Bó and Adriano Souza Senkevics).

While the theoretical arguments were already in the AEJ:Micro paper, the proposal had a greater and faster impact in the corridors of the Brazilian capital. Articles in the main newspapers in the country reported on the findings and the proposal (https://oglobo.globo.com/brasil/educacao/enem-e-vestibular/noticia/2023/03/quase-650-candidatos-para-uma-vaga-maiores-concorrencia-do-sisu-estao-entre-os-alunos-cotistas.ghtml

, https://oglobo.globo.com/brasil/antonio-gois/coluna/2023/02/reformar-o-sisu.ghtml

, https://www1.folha.uol.com.br/colunas/rodrigo-zeidan/2023/04/desenhando-mercados.shtml )

People were openly sharing the article on twitter with members of the ministry of education

(https://twitter.com/thiamparo/status/1621189953785839617?s=20 ,

https://twitter.com/mgaldino/status/1621008428763332612?s=20 ). We could feel the momentum.

In the months that followed, I started having regular interactions with members of the Ministry of Education. The text and zoom discussions involved technical and political aspects of changes in the law, which extended beyond the specific changes we suggested.

Different variations of the changes and some alternative proposals were considered. I had to run simulations while flying to deliver them before a meeting that the secretary had with the minister. I also had the incredible experience of joining a meeting at the “Casa Civil”—a department somewhat comparable to the prime minister in a parliamentary system—with the presence of secretaries from multiple ministries , where I presented our proposal and discussed some details and scenarios. Around that time, and without our knowledge, a senator presented a bill explicitly based on our proposal (https://www25.senado.leg.br/web/atividade/materias/-/materia/156995 ).

By the end of June, our belief that the changes would be implemented became stronger. Since our proposal was (by design) already compatible with the quotas law, its implementation could be done even in the absence of new legislation, and there was clear interest on the part of those in charge for making it happen.

A momentous event in this journey, however, took place on August 9th.

Because of a series of political circumstances, an urge to pass a renewed law for the affirmative action led to a bill proposed by Representative Dandara—the first member of congress who herself benefitted from the quotas law—to be brought to the floor for a vote.

Among other changes, it made the affirmative action policy permanent, changed the order in which seats are filled, and included text that should, in the following secondary legislation, include text that describes our proposal. As if emotions were not high enough, we had urgent calls to send the text of our proposal to members in the floor of congress minutes before the vote took place. And this resulted in the photo below, showing Dandara giving a speech before the vote, with a page from our paper in her hand.


The journey is not yet over. The bill must still pass the senate, and the legislation with the implementation details will follow. But I learned that these changes are made of so many steps that one has to choose one as the turning point. We believe that this is a good one.

The INEP (National Institute of Educational Studies and Research) thinks so too: (https://www.gov.br/inep/pt-br/assuntos/noticias/linha-editorial/inep-contribui-com-atualizacao-da-lei-de-cotas)

Saturday, July 8, 2023

Liver exchange in Turkey


Here's a forthcoming article in the AJT, reporting on a collaboration between physicians and market designers with experience in kidney exchange:

The First 4-Way Liver Paired Exchange from an Interdisciplinary Collaboration between Healthcare Professionals and Design Economists by Sezai Yilmaz, MD, FACS  Tayfun Sönmez, PhD  M. Utku Ünver, PhD  Volkan Ince, MD  Sami Akbulut, MD, FACS  Burak Isik, MD  Sukru Emre, MD  American Journal of Transplantation, BRIEF COMMUNICATION|ARTICLES IN PRESS, Open Access Published: July 05, 2023 DOI:https://doi.org/10.1016/j.ajt.2023.06.016 

Abstract: We report initial results of a Liver Paired Exchange (LPE) program established at the Liver Transplant Institute at Inonu University through collaboration with design economists. Since June 2022, the program has been using a matching procedure that maximizes the number of living donor liver transplants (LDLTs) to the patients in the pool subject to the ethical framework and the logistical constraints of the program. In one 4-way and four 2-way exchanges, twelve LDLTs have been performed via LPE in 2022. The 4-way exchange, generated in the same match run with a 2-way exchange, is a first worldwide. This match run generated LDLTs for six patients, revealing the value of the capacity to carry out larger than 2-way exchanges. With only 2-way exchanges, only four of these patients would receive LDLT. The number of LDLTs from LPE can be increased by developing the capacity to perform larger than 2-way exchanges in either high-volume centers or multi-center programs.

 

Sunday, February 26, 2023

Judd Kessler on Market Rules

 Judd Kessler is writing a book (that I'm looking forward to reading):



Thursday, December 8, 2022

Three way liver exchange in Pakistan, reported in JAMA Surgery by Salman, Arsalan, and Dar, in collaboration with economist Alex Chan

 Here's an exciting account, just published in JAMA Surgery, of a three way liver exchange in Pakistan, achieved in part by collaboration with economist and market designer Alex Chan (who is on the job market this year).

Launching Liver Exchange and the First 3-Way Liver Paired Donation by Saad Salman, MD, MPH1; Muhammad Arsalan, MBBS2; Faisal Saud Dar, MBBS2, JAMA Surg. Published online December 7, 2022. doi:10.1001/jamasurg.2022.5440 (pdf)

Here are the first paragraphs:

"There is a shortage of transplantable organs almost everywhere in the world. In the US, about 6000 transplant candidates die waiting each year.1 In Pakistan, 30% to 50% of patients who needed a liver transplant are unable to secure a compatible donor, and about 10 000 people die each year waiting for a liver.2 Kidney paired donations, supported by Nobel Prize–winning kidney exchange (KE) algorithms,3 have enabled living donor kidneys to become an important source of kidneys. Exchanges supported by algorithms that systematically identify the optimal set of paired donations has yet to take hold for liver transplant.

"The innovation reported here is the successful implementation of a liver exchange mechanism4 that also led to 3 liver allotransplants and 3 hepatectomies between 3 incompatible patient-donor pairs with living donor–patient ABO/size incompatibilities. These were facilitated by one of the world’s first documented 3-way liver paired donations (LPD) between patient-donor pairs.

"Since 2018 and 2019, we have explored LPD as a strategy to overcome barriers for liver failure patients in Pakistan in collaboration with economist Alex Chan, MPH.2 With LPD, the incompatibility issues with relative donors can be solved by exchanging donors. The Pakistan Kidney and Liver Institute (PKLI) adopted a liver exchange algorithm developed by Chan4 to evaluate LPD opportunities that prioritizes clinical urgency (Model for End-stage Liver Disease [MELD] scores) while maximizing transplant-enabling 2-way or 3-way swaps that ensures that hepatectomies for every donor within each swap has comparable ex ante risk (to ensure fairness). As of March 2022, 20 PKLI liver transplant candidates had actively coregistered living and related but incompatible liver donors. Evaluating these 20 incompatible patient-donor pairs with the algorithm,4 we found 7 potential transplants by two 2-way swaps and the 3-way swap reported. In contrast to ad hoc manual identification of organ exchange opportunities, the hallmark of a scalable organ exchange program is the regular deployment of algorithms to systematically identify possible exchanges. Regular deployment of LPD algorithms is novel.

"A total of 6 procedures took place on March 17, 2022. Patient 1, a 57-year-old man, received a right liver lobe from donor 2, a 28-year-old coregistered donor of patient 2 (56-year-old man), who in turn received a right liver lobe from donor 3, a 35-year-old woman who was a coregistered donor of patient 3. Patient 3, a 46-year-old man, received a right liver lobe from donor 1, a 22-year-old woman who was a coregistered donor of patient 1, completing the cycle (Figure). Five PKLI consultant surgeons and 7 senior registrars led the hepatectomies and liver allotransplants; 6 operating rooms were used simultaneously. One month postsurgery, all patients and donors are robust with no graft rejection. All the donors are doing well in the follow-up visits and have shown no psychological issues."



Here's a sentence in the acknowledgements:

"We thank Alex Chan, MPH (Stanford University, Palo Alto, California), whose initiative and expertise in economics were the key driving forces for launching liver exchange."

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NB: this is a "Surgical Innovation" article, for which the journal requires that there be no more than three authors.

And here are the references cited:

1.
Chan  A, Roth  AE. Regulation of organ transplantation and procurement: a market design lab experiment. Accessed April 28, 2022. https://www.alexchan.net/_files/ugd/a47645_99b1d4843f2f42beb95b94e43547083b.pdf
2.
Salman  S, Gurev  S, Arsalan  M, Dar  F, Chan  A. Liver exchange: a pathway to increase access to transplantation. Accessed April 1, 2022. http://www.hhpronline.org/articles/2021/1/14/liver-exchange-a-pathway-to-increase-access-to-transplantation
3.
Henderson  D. On marriage, kidneys and the Economics Nobel. Wall Street Journal. October 15, 2012. Accessed March 5, 2022. https://www.wsj.com/articles/SB10000872396390443675404578058773182478536
4.
Chan  A. Optimal liver exchange with equipoise. Accessed April 23, 2022. https://www.alexchan.net/_files/ugd/a47645_36e252f4df0c4707b6431b0559b03143.pdf
5.
Hwang  S, Lee  SG, Moon  DB,  et al.  Exchange living donor liver transplantation to overcome ABO incompatibility in adult patients.   Liver Transpl. 2010;16(4):482-490. doi:10.1002/lt.22017PubMedGoogle ScholarCrossref
6.
Patel  MS, Mohamed  Z, Ghanekar  A,  et al.  Living donor liver paired exchange: a North American first.   Am J Transplant. 2021;21(1):400-404. doi:10.1111/ajt.16137PubMedGoogle ScholarCrossref
7.
Braun  HJ, Torres  AM, Louie  F,  et al.  Expanding living donor liver transplantation: report of first US living donor liver transplant chain.   Am J Transplant. 2021;21(4):1633-1636. doi:10.1111/ajt.16396

 ********

Here's a Stanford story on this collaboration:

Stanford student devises liver exchange, easing shortage of organs. A rare three-way exchange of liver transplants in Pakistan was made possible with a new algorithm developed by a Stanford Medicine student.  by Nina Bai

"The liver exchange idea actually came out of a term paper in a first-year market design class at Stanford," Chan said.

"As he learned more about liver transplants, Chan realized there were important biological and ethical differences from kidney transplants. 

...

"Instead of just finding compatible swaps, we want to find swaps that prioitize the most urgent patients first in order to prevent the most deaths," Chan said.

*******

Here are some contemporaneous stories from March in the newspaper Dawn (now that the JAMA embargo on the story is lifted):

Mar 18, 2022 — A highly-trained team of the surgeons headed by PKLI Dean Prof Faisal Dar had performed liver transplants at the institute and other members ...

Saturday, May 21, 2022

Iowa State University celebrates Bertan Turhan

 The Iowa State University News Service has an article about the market design work of Bertan Turhan.

New model could improve matches between students and schools

"For the majority of students in the U.S., residential addresses determine which public elementary, middle, or high school they attend. But with an influx of charter schools and state-funded voucher programs for private schools, as well as a growing number of cities that let students apply to public schools across the district (regardless of zip code), the admissions process can turn into a messy game of matchmaking.

"Simultaneous applications for competitive spots and a lack of coordination among school authorities often result in some students being matched with multiple schools while others are unassigned. It can lead to unfilled seats at the start of the semester and extra stress for students and parents, as well as teachers and administrators.

"Assistant Professor of Economics Bertan Turhan at Iowa State University and his co-authors outline a way to make better, more efficient matches between students and schools in their new study published in Games and Economic Behavior. Turhan says their goal was to create a fairer process that works within realistic parameters.

“There are a lot of success stories in major U.S. cities where economists and policymakers worked together to improve school choice,” said Turhan. “The algorithm we introduced builds on that and could give school groups some degree of coordination and significantly increase overall student welfare in situations where there’s a lot of competition to get into certain schools.” 

...

"Over the next year, Turhan and his team will be studying the implementation of their model in India where two types of colleges have revamped their admissions process."

********

Here's the paper that was the occasion of the story:

Parallel markets in school choice by Mustafa Oğuz Afacan, Piotr Evdokimov, Rustamdjan Hakimov, and Bertan Turhan

Games and Economic Behavior, Volume 133, May 2022, Pages 181-201, https://doi.org/10.1016/j.geb.2022.03.003Get rights and content

Abstract: When applying to schools, students often submit applications to distinct school systems that operate independently, which leads to waste and distortions of stability due to miscoordination. To alleviate this issue, Manjunath and Turhan (2016) introduce the Iterative Deferred Acceptance mechanism (IDA). We design an experiment to compare the performance of this mechanism under parallel markets (DecDA2) to the classic Deferred Acceptance mechanism with both divided (DecDA) and unified markets (DA). Consistent with the theory, we find that both stability and efficiency are highest under DA, intermediate under DecDA2, and lowest under DecDA. While IDA is not strategy-proof, we show theoretically that strategic reporting can only lead to improved efficiency for all market participants. The experimental results are consistent with this prediction. Our findings cast doubt on whether strategy-proofness should be perceived as a universal constraint to market mechanisms.


Monday, May 16, 2022

Happy birthday to Bob Wilson

  Happy birthday Bob!





Friday, March 25, 2022

Scott Kominers on entrepreneurial market design (podcast)

 Scott Kominers is interviewed on the Things to Know podcast, about the arc of his career, and how it led him to market design, and crypto, NFTs, and beyond.

"Market design is a sort of wrapper around economics..."

 

Sunday, September 26, 2021

Stanford celebrates Irene Lo

 Stanford's School of Engineering celebrates Irene Lo, in an interview and video:

"Engineer Irene Lo studies markets, but not traditional marketplaces based in cash.

Instead, she studies markets for goods/resources that place a high value on social goods like diversity, fairness and equity.

Thus, Lo came to help San Francisco create an algorithm to assign kids more fairly to public schools across geographic, social, racial and economic boundaries. As it turns out, math is just the first step. The most challenging part was getting families to trust in the system, begetting a multi-year community engagement effort.

Lo is now turning her attention to other markets with social impact, like her work on the system that places medical students in residency programs across the country or one trying to make the palm oil supply chain fairer for farmers.

Listen in as Irene Lo explains the changing face of markets to host Russ Altman in this episode of Stanford Engineering’s The Future of Everythingpodcast. Listen and subscribe here."


Saturday, March 27, 2021

Kim Krawiec to UVA

 Controversial markets are coming to Virginia:

Here's the announcement from the U. of Virginia:

Kimberly Krawiec, Expert in Controversial Markets, To Join Faculty

"Kimberly D. Krawiec, a leading expert in market regulation, will join the University of Virginia School of Law faculty in the fall.

...

“Kim is a major contemporary voice on misconduct and trade within forbidden or contested markets,” Dean Risa Goluboff said in welcoming Krawiec to the faculty.

...

"Krawiec, who visited at UVA Law in 2004, has taught both large lecture classes and smaller ones, including her recent favorites Taboo Trades and Forbidden Markets, and Advanced Contracts. “Taboo Trades” is also the name of the podcast she launched in August, which so far has covered topics ranging from marijuana legalization to blood and other “repugnant transactions.”

Monday, February 1, 2021

Economics and Engineering (and market design): some history and prehistory, at Stanford and elsewhere

The  December 2020 issue of History of Political Economy is devoted to Economics and Engineering.

Here's an account of Stanford and Bob Wilson (among others), written before the most recent Nobel prize to Wilson and Milgrom.

A Century of Economics and Engineering at Stanford by Beatrice Cherrier and Aurélien Saïdi

History of Political Economy (2020) 52 (S1): 85–111.  https://doi.org/10.1215/00182702-8717936

"This article documents the disciplinary exchanges between economists and engineers at Stanford throughout the twentieth century. We outline the role of key scholars such as Kenneth Arrow and Robert Wilson, as well as engineers turned administrators like Frederick Terman. We show that engineers drew upon economic theories of decision and allocation to improve practical industrial management decisions. Reciprocally, economists found in engineering the tools that they needed to rethink production and growth theory (including linear programming, optimal control theory, an epistemology of “application” that emphasized awareness to institutional details, trials and errors and experiments). By the 2000s, they had turned into economic engineers designing markets and other allocation mechanisms. These cross-disciplinary exchanges were mediated by Stanford’s own institutional culture, notably its use of joint appointments, the development of multidisciplinary “programs” for students, the ability to attract a variety of visitors every year, the entrepreneurial and contract-oriented vision of its administrators, and the close ties with the industrial milieu that came to be called the Silicon Valley.

..

"This article should not be read as a history of economics, engineering, or management science at Stanford and their idiosyncrasies.4  None of the research programs or institutional arrangements we describe were unique to Stanford. Rather, we document how some of the engineering and economics theories, tools, and epistemologies developed elsewhere were recombined in a specific institutional setting and entrepreneurial culture, and thus came to infuse the vision that some Stanford economists developed and spread in the last decades."

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

The pdf to the full article appears to be ungated, and will be especially rewarding to old Stanford hands, who will recognize a lot of names from Operations Research as well as from Econ.

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

And here's the introduction to the whole December special issue, by its editors:

Introduction: From “Economics as Engineering” to “Economics and Engineering”  by Pedro Garcia Duarte and Yann Giraud

History of Political Economy (2020) 52 (S1): 10–27.  https://doi.org/10.1215/00182702-8717898

"Economists such as Alvin Roth and Esther Duflo have recently argued that economics in the late twentieth century has evolved from (social) science to engineering. On the other hand, historians such as Mary Morgan and Michel Armatte have argued that the transformation of economics into an engineering science has been a century-long development. Turning away from the “economics as engineering” analogy, our introduction suggests an alternative approach to account for the presumed transformation of economics into an engineering science. We encourage the development of a history of “economics and engineering,” which depicts how these two types of knowledge–and the communities who produce them–have interacted in various institutional and national contexts. Drawing on the contributions to this 2020 annual supplement of HOPE, we show how these narratives may help change the historiography of twentieth-century economics."

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

As it happens, I had the privilege of discussing some of these papers  in Atlanta in  2019 at the ASSA meetings, in a session sponsored by  the History of Economics Society, and chaired by Pedro Garcia Duarte.

Another paper from that session that appears in this issue of HOPE is 

Engineering the “Statistical Control of Business”: Malcolm Rorty, Telephone Engineering, and American Economics, 1900–1930  by Thomas A. Stapleford

History of Political Economy (2020) 52 (S1): 59–84.  https://doi.org/10.1215/00182702-8717924

"Malcolm Rorty is best known to historians of economics as the primary organizer and founder of the National Bureau of Economic Research. This article situates Rorty’s interest in economics against the backdrop of his early career in telephone engineering at American Telephone & Telegraph. I argue that distinct structural features of telephone engineering in general, and AT&T in particular, created overlaps between the practices of engineering and economics, and also opened space for Rorty to craft a broader vision for the “statistical control of business” through quantitatively informed management."

Friday, November 27, 2020

Market Design Job Market Candidates in Econ and Computer Science (or a combination of the two) from SIGecom Exchanges

 Assaf Romm writes:

"The editors of SIGecom Exchanges were kind enough to host on their November issue a list that I compiled containing profiles of market designers currently on the job market. The profiles contain links to their homepage and CVs, and a short summary of their research and job market papers. There are twelve excellent candidates with very interesting papers!

"The list of candidate profiles is here. "

And here's the list of people described at greater length at the link--you could hire one of them.

Delacretaz, David, Goldner, Kira,  Gonczarowski, Yannai A., Imamura, Kenzo, Koren, Moran, Larroucau, Tomas, Qian, Pengyu, Raghavan, Madhav, Sayedahmed, Dilek, Sullivan, Colin. Thakur, Ashutosh , Vohra, Akhil.

Monday, October 12, 2020

Finally! Paul Milgrom and Bob Wilson win the 2020 Nobel Prize in Economics

 Could this be the best Nobel pairing ever?  (It's certainly a great one, and one of the best things to come out of 2020 so far...) Here's the announcement:

"The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats" https://www.nobelprize.org/


I've known Paul at least since 1978, when he attended a course I taught while on leave at Stanford, on Axiomatic Models of Bargaining. Bob advised both of our dissertations, although not at the same time.  

Bob is a legendary advisor of grad students.  Paul is now the third of Bob's  students to win a Nobel.  So Bob is well established as the patriarch of a Nobel dynasty.



Bob Wilson's Nobel dynasty (to date): Wilson (with Milgrom) 2020, and Bob's students Roth (with Shapley) 2012, Holmstrom (with Hart) 2016, and Milgrom (with Wilson) 2020

It looks like we should check back in 2024...

Here's another picture, from another celebration:



Bob Wilson being celebrated for the 2017 CME MSRI prize, by his students Al Roth, Paul Milgrom, and Bengt Holmstrom.


I've often blogged about  both Milgrom and Wilson, separately and together.

Here's a paragraph I wrote about Bob's work in our (only) joint paper, in which we interviewed each other:

Alvin E. Roth and Robert B. Wilson
Journal of Economic Perspectives—Volume 33, Number 3—Summer 2019—Pages 118–143

"Wilson (1977) introduced the model of common-value auctions (sometimes called the “mineral rights model”). The model and its equilibrium initiated a large body of theoretical, experimental, and applied work. One important insight from this model is that winning an auction contains “bad” news, since it implies in equilibrium that the winner’s estimate is the highest. In equilibrium, rational bidders fully account for this, but the paper raises the empirical question of the extent to which actual  bidders are able to fully discount for the fact that, if they win the auction, they likely overestimated the value of winning. Thus, Wilson’s work initiated a new research program on the winner’s curse, involving systematic overbidding compared to equilibrium, sometimes involving losses to the winning bidder. The private-value model of Vickrey (1961) and the common-value model of Wilson (1977) together form the basis of much of modern auction theory and practice, since most auctions have elements of both private and common value." 

Right after that, Bob and I talked about important influences on our work. Bob included this:

"I was deeply affected in the early 1990s by working with Paul Milgrom on design of the FCC spectrum auctions. I marveled at his insights and creativity in constructing rules for a “simultaneous ascending auction” that would have good prospects of yielding an approximately efficient outcome in an environment afflicted with strong complementarities, dispersed private information about market fundamentals, and substantial market power."  

To which I replied:
" I was also much influenced by Paul when we developed and co-taught what may have been the first courses in market design, in 2000 and again in 2001 when he was on leave at Harvard and MIT." 


*********
Here's an old snapshot:
Bob Wilson and Paul Milgrom in 2006

There's a rabbinical literature about the relationships between students and teachers. It often comes to mind when I think about how lucky I have been to have the students I've had. But today I'm reminded of my luck in having Bob Wilson as my teacher and friend, and Paul as my friend and colleague.

"Joshua ben Perahiah used to say: provide yourself a teacher and acquire yourself a friend. Judge everyone favorably." (Pirkei Avot, chapt 1 verse 6)


Here's how I recalled Bob as a teacher, in an autobiographical essay of a kind that they will each now be asked to write:

"Bob Wilson agreed to be my advisor and rescued me from having what looked to be a very short academic career after I failed one of my Ph.D. qualifying exams. He was on sabbatical that year, but met with me regularly once a week for an hour. In memory, our meetings followed a kind of script: I would spend a while explaining to him why I hadn’t made progress that week, and then he would spend a while telling me not to be discouraged. Then I would describe some roadblock to further progress, and he would, as we finished our meeting, recommend a paper for me to read. Because his recommendations had always been very much on target, I would go straight from his office to the library and start to read the paper. As I did, I would think, this time Bob made a mistake, this paper has nothing to do with my problem. But then, somewhere in the middle of the paper would be a lemma or remark that helped me get around that roadblock …"
*************
And here's a final picture from Stockholm in 2012, of me and Emilie and Paul and Eva, with Parag Pathak (one of Bob's academic grandchildren) in the  background.
**************************************************

Read the press release

"The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020 to

Paul R. Milgrom
Stanford University, USA

Robert B. Wilson
Stanford University, USA

“for improvements to auction theory and inventions of new auction formats”

...

“This year’s Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally. Their discoveries are of great benefit to society,” says Peter Fredriksson, chair of the Prize Committee."
Learn more in the popular information

"Every day, auctions distribute astronomical values between buyers and sellers. This year’s Laureates, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefitting sellers, buyers and taxpayers around the world."
Read the scientific background


Friday, October 9, 2020

Jobs for market designers in Washington D.C. and at Facebook

 I still get a small thrill when I see jobs for market designers appear, appropriately, in places that not so very long ago hadn't heard of market design.. Here's an ad from the Congressional Budget Office.

Climate and Energy Economist, Congressional Budget Office – Washington DCPublished October 2, 2020  

"The Energy, Environment, and Infrastructure Unit conducts research and analysis on certain topics of interest to the Congress, including climate change, energy and related environmental issues, transportation and infrastructure, and federal policy toward research and development. In the coming years, the unit expects to expand its capacity to model the effects of climate change and climate change policy on the budget and the economy.

...

"Qualifications: Applicants must have either a Ph.D. in economics or a related discipline or a master’s degree with five years of experience in one of those fields. They should also have strong quantitative and modeling skills; preference will be given to candidates with experience modeling energy markets or systems. A background in industrial organization or market design, public finance, or a related microeconomic field is desirable"

********

And here's an ad for a crypto-economist at Facebook:

Novi Economics/Blockchain at Facebook

"Description: Novi is a Facebook subsidiary whose goal is to provide financial services for Libra, a new global currency powered by blockchain technology. The first product Novi will introduce is a digital wallet, which will be available in Messenger, WhatsApp and as a standalone app. The first version of Novi will support peer-to-peer payments and a few other ways to pay such as QR codes which small merchants can use to accept payments in Libra. Over time there will be many other use-cases for Novi including in-store payments, integrations into Point-of-Sale systems, and more. When launched, Novi will have strong fraud and privacy protections. The Novi digital wallet is expected to launch in 2020.

"The Novi economics team is seeking exceptional candidates from all fields, with a special focus on applied microeconomics, development, macroeconomics, finance, and market design, to join our team. Individuals in this role are expected to have deep expertise and the ability to leverage economic theory into real-world, practical solutions for blockchain based problems."

Wednesday, September 9, 2020

Fuhito Kojima wins the 2021 Japanese Economic Association Nakahara Prize

 Congratulations to Fuhito Kojima, who is the 2021 winner of the Nakahara Prize of the Japanese Economic Association, which is awarded each year to an exceptional economist under the age of 45.

You can find the announcement (in Japanese) here. Google translate works well, and you can see the list of previous winners.

Here's part of the English announcement (which I can't find on the web...)

"The 2021 Japanese Economic Association Nakahara Prize

Professor Fuhito Kojima

"The Nakahara prize was established in 1995 and is funded by a donation from Mr. Nobuyuki Nakahara. The aim of the prize is to honor and encourage young researchers under the age of 45 to publish internationally recognized research. 

It is a great pleasure to announce that the 2021 Nakahara prize has been awarded to Professor Fuhito Kojima. Born in 1979, Professor Kojima received BA in economics from the University of Tokyo, and earned Ph.D. in economics from Harvard University in 2008. He was Assistant, Associate and then Full Professor of Economics at Stanford University, and he is Professor of Economics at the University of Tokyo from September 2020.

Professor Kojima’s research is focused on matching theory and market design. He has made a number of important contributions to the field. Many of his researches are motivated by various kinds of constraints imposed on matching problems in real life. His research significantly contributes to widening applicability of the theory to real matching markets.

...

"Selected Publications

1. “Job Matching under Constraints” (2020), joint with Ning Sun and Ning Neil Yu,  conditionally accepted, American Economic Review.

2. “Stable Matching in Large Economies” (2019), with Yeon-Koo Che and Jinwoo Kim, Econometrica, 87-1, pp65-110.

3. “Efficient Matching Under Distributional Constraints: Theory and Applications” (2015), with Yuichiro Kamada, American Economic Review, 105, pp 67-99.

4. “Matching with Couples: Stability and Incentives in Large Matching Markets” (2013), with Parag A. Pathak and Alvin E. Roth, Quarterly Journal of Economics 128, pp 1585-1632.

5. “Designing Random Allocation Mechanisms: Theory and Applications” (2013), with Eric Budish, Yeon-Koo Che, and Paul Milgrom, American Economic Review 103, pp 585-623.

6. “Asymptotic Equivalence of Probabilistic Serial and Random Priority Mechanisms” (2010), with Yeon-Koo Che, Econometrica 78, pp 1625-1672.

7. “Axioms for Deferred Acceptance” (2010), with Mihai Manea, Econometrica 78, pp 633-653.

8. “Incentives and Stability in Large Two-Sided Matching Markets” (2009), with Parag A. Pathak, American Economic Review 99, pp 608-27.

SELECTION COMMITTEE

Kosuke Aoki (Chair) (University of Tokyo), Anton Braun (Federal Reserve Bank of Atlanta), Federico Echenique (California Institute of Technology), Yuichi Kitamura (Yale University), Fumio Ohtake (Osaka University), Tadashi Sekiguchi (Kyoto University), Mototsugu Shintani (University of Tokyo)

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

By a strange coincidence,  in 2013 I was the recipient of a non-academic award signed by Mr. Nobuyuki Nakahara, whose interests extend beyond economics.

Saturday, September 5, 2020

Paul Milgrom celebrates his 100,000th Google cite

 100,000 and counting.


Paul Milgrom on Google Scholar

Monday, June 15, 2020

Paul Milgrom corrects the record on spectrum auctions and market design

Paul Milgrom responds in detail to some scurrilous online criticisms and innuendos about market designers in general and spectrum auctions in particular.

 The Market Design Community and the Broadcast Incentive Auction: 
Fact-Checking Glen Weyl’s and Stefano Feltri’s False Claims
By Paul Milgrom*  June 3, 2020 (and republished on Digitopoly on June 14)

"In a recent Twitter rant and a pair of subsequent articles in Promarket, Glen Weyl [1] and Stefano
Feltri [2] invent a conspiratorial narrative according to which the academic market design community is secretive and corrupt, my own actions benefitted my former business associates and the hedge funds they advised in the 2017 broadcast incentive auction, and the result was that far too little TV spectrum was reassigned for broadband at far too little value for taxpayers.
The facts bear out none of these allegations. In fact, there were:

• No secrets: all of Auctionomics’ communications are on the public record,
• No benefits for hedge funds: the funds vigorously opposed Auctionomics’ proposals, which reduced their auction profits,
• No spectrum shortfalls: the number of TV channels reassigned was unaffected by the hedge funds’ bidding, and
• No taxpayer losses: the money value created for the public by the broadband spectrum auction was more than one hundred times larger than the alleged revenue shortfall.
...
[read the rest to get the facts...]

[1] “It Is Such a Small World: The Market-Design Academic Community Evolved in a Business Network.” Stefano Feltri, Promarket, May 28, 2020.
[2] “How Market Design Economists Helped to Engineer a Mass Privatization of Public Resources.” Glen Weyl, Promarket, May 28, 2020.

Thursday, June 4, 2020

David Levine on market design, in the Journal of Economic Literature

David Levine uses a book review in the JEL as an opportunity to think about what distinguishes real market design from imitations.

Radical Markets by Eric Posner and E. Glen Weyl: A Review Essay
David K. Levine
Journal of Economic Literature 2020, 58(2), 471–487   https://doi.org/10.1257/jel.20191533

Abstract: "At a time when standards of living have improved more than any time in history, this
book makes a proposal for radical change. It is based—loosely—on market design principles. The plan for attacking overlapping ownership is reasonably well thought out. Most of the book, however, proposes to use mechanisms designed for a narrow purpose; to attack real or imagined problems that they are ill-suited to solve. I conclude that while market design has a lot to offer when properly applied, the proposals here are not sufficiently well thought out to constitute a serious plan of action."

And here are his concluding paragraphs:

"The authors have a message. Market design is great and it is easy. Markets are sloppy affairs: sometimes buyers post prices, sometimes sellers, some goods are sold at auction, others on exchanges … some are even sold (sniff, sniff) through bargaining. We can fix this: we’ll replace all of these nasty old markets with a simple clean government run auction. The poor will become rich and the rich will have to work for a living!

"I have a message. Market design is great and it is hard. Allocating oil leases is not the same as allocating the radio spectrum. Thick markets are not the same as thin markets. Auctions are complicated. Private information may lie on the buyer side, on the seller side, or both. Real market designers know this. They tailor solutions to problems: having designed an algorithm for allocating residents to hospitals and faced with the problem of matching kidney donors to patients they did not blindly claim to have solved that problem, but instead dug into the details and designed an algorithm for the kidney matching problem. Real market designers sweat the details: they improve lives and prosperity. Listen to real market designers."