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Marketplaces, Markets, and Market Design
Abstract
Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.
... By contrast, the present article assumes a monopolistic market, but introduces a richer preferences structure (allowing for horizontal tastes for matches), which enables us to study targeting and price customization in such markets. 43 The study of price customization is related to the literature on price discrimination. In the case of second-degree price discrimination, Mussa and Rosen (1978), Maskin and Riley (1983), and Wilson Related is also the literature on bundling (see, among others, Armstrong (2013), Hart and Reny (2015), and the references therein). ...
... Design" for a connection between the two literatures. 43 Most of the literature on two-sided markets assumes that platforms price discriminate across sides but not within side. For models of within-side price discrimination, see also Halaburda . ...
... preference structures are examined in the matching literature surveyed inRoth (2018) (see alsoKojima (2017) andPathak (2017) for a detailed discussion of some of the recent contributions). This literature is methodologically distinct from the current article, in that it focuses on solution concepts40 Both the present article and Gomes and Pavan (2016) use mechanism design to characterize the properties of the optimal matching sets and to establish that the latter have a threshold structure (with the thresholds profile-specific in the present article). ...
We introduce a model of (platform‐mediated) many‐to‐many matching in which agents' preferences are both vertically and horizontally differentiated. We first show how the model can be used to derive the profit‐maximizing matching plans under customized pricing. We then investigate the implications for targeting and welfare of uniform pricing (be it explicitly mandated or induced by privacy regulation), preventing the platform from conditioning prices on agents' profiles. The model can be applied to study ad exchanges, online retailing, and media markets.
... In the redesign of the matching market for American Physicians [13], stable matching also provides good approximations in a more complex market where applicants and positions have complementarities. This matching stability is later regarded as a standard requirement in labor markets design [12]. ...
... In current practice, job searching engines, such as Monster, LinkedIn, CareerBuilder, and Glassdoor, can effectively accommodate market dynamics. However, their matching (recommendation) algorithms consider the fitness of matching at the individual job and applicant level, and they do not produce market-level matching stability as prescribed in [12]. ...
p>Online labor markets, which allow applicants to seek suitable jobs anytime and anywhere, offer greater flexibility than traditional offline labor markets. This paper investigates a dynamic matching system that assigns appropriate applicants to appropriate vacancies in the condition that the arrivals of applicants and vacancies are uncertain. The objective of the matching system is to obtain a stable matching solution for both applicants and vacancies. To this aim, we propose three dynamic matching algorithms for three different market settings. The theoretical proof of the stability of each matching algorithm is given, and we conduct a series of computational experiments to verify the effectiveness and efficiency of the proposed matching algorithms. The results indicate that the algorithms can be an efficient and effective tool for recruitment management in today’s active and internet-based labor markets to reduce the administrative workload of human resource departments and produce stable job allocations.</p
... When in addition the economies of scale derive only from potential exercise of market power (not from physical and engineering reasons), interventions based on cardinally concave transfer functions not only recover substitutability but also preempt monopolistic behaviours. 9 Our paper belongs to the vast literature on policy interventions in marketplaces (Roth, 2018). In market design, there are few studies of transfer policies, which are monetary and soft, but there is a blossoming literature on compulsory constraints. ...
... In transferable utility settings, Bing et al. (2004), Milgrom (2009), Biró et al. (2010, Abizada (2016), Hatfield et al. (2016), and Echenique et al. (2021) also study constraints. In non-transferable utility settings, fiscal policies are naturally absent; an incomplete list of compulsory policy research includes Abdulkadiroglu and Sönmez (2003), Biró et al. (2010), Huang (2010), Hafalir et al. (2013), Ehlers et al. (2014), Kamada and Kojima (2015, 2018, Kominers and Sönmez (2016), Fragiadakis and Troyan (2017), Goto et al. (2017), Dur et al. (2018), Nguyen and Vohra (2019), Aygün and Turhan (2020), and Ellison and Pathak (2021). To the best of our knowledge, there is no formal connection between our paper and this literature. ...
In markets for indivisible resources such as workers and objects, subsidy and taxation for an agent may depend on the set of acquired resources and prices. This paper investigates how such transfer policies interfere with the substitutes condition, which is critical for market equilibrium existence and auction mechanism performance among other important issues. For environments where the condition holds in the absence of policy intervention, we investigate which transfer policies preserve the substitutes condition in various economically meaningful settings, establishing a series of characterization theorems. For environments where the condition may fail without policy intervention, we examine how to use transfer policies to reestablish it, finding exactly when transfer policies based on scales are effective for that purpose. These results serve to inform policymakers, market designers, and market participants of how transfer policies may impact markets, so more informed decisions can be made.
... Prior technological transformations, such as the steam engine, electricity, and computing, respectively, were all influenced by public policies. Awareness of the importance of good governance increased greatly in the late twentieth century and was increasingly recognized as a prerequisite for well-functioning markets (Ostrom, 2010;Roth, 2018). Information about good regulation had been shared among OECD countries and other international bodies since the late 1990s (see, e.g., Odugbemi & Jacobson, 2008;OECD, 1995OECD, , 2012. ...
... The design of agile regulation is a special case of the more general institutional design problem mentioned above: the alignment of governance arrangements with the technical, economic, and social conditions of a socio-technical system. Recent advances in economics highlight the importance of the design of appropriate rules for markets (Maskin, 2008;Milgrom, 2017;Ostrom, 2010;Roth, 2018). Current agile regulation proposals generally do not build on this body of conceptual knowledge, although they may point to it in a metaphorical way. ...
The Organisation for Economic Co-operation and Development (OECD) and national policymakers are increasingly embracing agile regulation. They see it as a response to the new patterns of scientific and technological innovation often referred to as the Fourth Industrial Revolution. Agile regulation uses instruments, such as anticipatory regulation, outcome-focused regulation, data-driven regulation, and experimental regulation to support fast-paced, cross-sectoral innovation while mitigating the potential harms of such rapid change. These methods are seen as complements and substitutes to traditional regulation, which is perceived as comparatively rigid and slow. Despite the heightened interest in agility, the notion that regulation sometimes needs to adapt quickly is not entirely new. With a focus on network infrastructure policy, this chapter examines the past and future roles of agile forms of regulation in the digital economy. In a broader historical arc, agile regulation is but the latest adaptation of governance in the co-evolution of sector conditions and policy approaches. It is primarily a practical response to improve the procedural rationality of governance but is built on weaker theoretical foundations than traditional regulation. It will therefore be important to establish appropriate learning and knowledge-sharing frameworks that will contribute to a gradual refinement of the approach.
... Although the total amount of commercial and trade activity in the L area is high, it has obvious problems (Zhu, 2019). Most commercial premises are small commodity markets and markets for household goods in which citizens participate, and the overall level of commercial activity is low (Roth, 2018). The market is a single-minded one (Roth, 2018). ...
... Most commercial premises are small commodity markets and markets for household goods in which citizens participate, and the overall level of commercial activity is low (Roth, 2018). The market is a single-minded one (Roth, 2018). 2. The development of the area's commercial functions is slow (Zhu, 2019). ...
The application of strategic management theory is lacking in the public sector. Relative to the public sector, the private sector has implemented strategic management approaches with great success. This study uses case studies of individual organizations to explain the definition and characteristics of strategic management theory, as well as the problems and crises that can arise. The study shows that the external environment of the public sector is complex and unstable. The government and the corresponding organizations should adapt quickly to the actual situation so that the capabilities of the members of public organizations can be improved.
... Although generators could access transmission networks before agreeing on a tariff with the owner, this constituted an additional risk when signing supply contracts. Also, the Enersis distribution affiliates could allocate to Endesa the supply of their regulated customers at the regulated price, 3 especially in the low-demand time blocks with lower spot prices. ...
... In particular, they set market rules without knowing how economic agents will interact with them. Although game theory, behavioral theory, and experimental economics can help anticipate how markets will work [3], only the operation of the market reveals some of its design flaws, as the Chilean experience shows. Consequently, a first lesson is that the initial market design is likely to need adjustments to correct initial defects or to respond to new information or technological advances. ...
It has been almost 40 years since Chile reformed its electricity sector. In 1982, the Electricity Act created an energy market for generators and large customers to negotiate supply contracts. It also established a centralized dispatch of power plants in ascending order of generation cost, independent of their owners' supply contracts. This setup results in power exchanges between generators, which are valued using the system's marginal costs. This paper: (i) describes the market design; (ii) shows its evolution to date; (iii) describes the triggers for change; (iv) draws policy lessons and (iv) provides a preliminary assessment of the reform.
... En orden a mejorar el proceso de postulación y selección a cargos asociados a los SLEP en sus diferentes niveles, se podrían incorporar diseños asociados a postulaciones coordinadas del tipo de matching markets existentes en otros lugares del mundo -sobre todo en mercados de salud, pero también en otros contextos (Roth, 2018)-y que recientemente se ha empezado a utilizar en el mundo de la educación (para una descripción de América Latina ver Aguilera et al., 2023, para un análisis académico en Perú ver Bobba et al., 2024, y para Ecuador, Elacqua et al., 2022. ...
... In practice, markets for Arrow-Debreu commodities are usually so thin that they are rarely traded. Real "commodity markets require design of both the marketplace procedures and the commodities themselves" (Roth 2018(Roth , p. 1611. After hinting at the uncountable expanse of theoretical goods, even Debreu (1959, p. 32) abruptly informs the reader that "it is assumed that there is only a finite number of distinguishable commodities" (emphasis added). ...
We study competitive equilibria in exchange economies when a continuum of goods is conflated into a finite set of commodities. The design of conflation choices affects the allocation of scarce resources among agents, by constraining trading opportunities and shifting competitive pressures. We demonstrate the consequences on relative prices, trading positions, and welfare.
... These concepts are used to design sustainable market matching mechanisms for the freight services industry. In this context, a market is defined as a system that enables stakeholders, mainly buyers and sellers, to exchange goods, services, and information (Roth, 2018). As it relates to our research, the freight transport market refers to the exchange of freight services and information between shippers and truckers (Jothi Basu, et al., 2015). ...
Despite the indispensability of freight trucking services and truckers’ role as critical stakeholders in supply chains, relatively little attention has been paid to analyzing small independent truckers’ roles. Shippers often prefer working with larger trucking companies to the detriment of smaller independent truckers, who must grapple with an inherently disadvantageous job market. Furthermore, in the presence of uncertainty or peak demand periods, trucker shortages can pose significant economic challenges for shippers and downstream customers. In this paper, we propose an analytical framework to address these challenges in efforts to enhance the sustainability of the freight service industry. We formulate and solve a weighted bi-objective optimization model that simultaneously maximizes the total profits of both shippers and truckers to design a sustainable freight services market. Further, we leverage Monte Carlo simulation trials to examine how all players in this market can achieve a better solution under uncertainty. Ultimately, after evaluating multiple scenarios, we find that shippers and truckers yield the highest economic benefits under a balanced design that leverages principles of supply chain coordination, while satisfying all demand from shippers. This framework can serve as a decision support tool for policymakers who aim to ensure all stakeholders in the market can become and remain profitable. Based on our findings, this study suggests practical implications on how to consider humanitarian policies aimed at promoting equity for truckers and ensuring the timely shipment of essential products for both shippers and truckers.
... The previous argument is not always true, as sometimes the market fails, leading to the optimum use of scarce resources (Tirole 2015). Many times, markets have led to various levels of success, as well as market failures (Roth 2018). Public goods, externalities, incomplete competitiveness, and common resources are only some forms of microeconomic market failures (Morrissey et al. 2002). ...
Could the European Union mitigate the negative effects of economic, pandemic and environmental crises using only one tool? The answer is positive, by implementing “green” fiscal expansion financed by “green” common debt, such as issuing green bonds. In this paper, we connect the independent responses to different crises into a single response that could end them. The European Union’s theoretical background is based on new-classical models, but current research findings doubt new-classical orthodoxy, underling the importance of economic federalism for sustainable economic and green growth. We argue that the Economic and Monetary Union has to speed up fiscal federalism by establishing a powerful European Union common budget using green Eurobonds and implementing fiscal transfers as a mechanism to address the consequences of the triple crisis.
... Our finding adds a new perspective to this debate: In a matching market with significant complementarities and peer effects, no-poaching agreements can help maintain stability in the absence of static stable matchings. Because stability is crucial for the effective functioning of markets (Roth 2018), prohibiting such agreements could lead to market failure. ...
The classic two-sided many-to-one job matching model assumes that firms treat workers as substitutes and workers ignore colleagues when choosing where to work. Relaxing these assumptions may lead to nonexistence of stable matchings. However, matching is often not a static allocation, but an ongoing process with long-lived firms and short-lived workers. We show that stability is always guaranteed dynamically when firms are patient, even with complementarities in firm technologies and peer effects in worker preferences. While no-poaching agreements are anti-competitive, they can maintain dynamic stability in markets that are otherwise unstable, which may contribute to their prevalence in labor markets.
... Similarly, the role of a market as a place of social inclusion relates to the fact that it can function well as a public space where marginalized groups spend time, thereby providing opportunities to escape isolation at home or elsewhere while at the same time giving room for economic integration [47]. Appropriate interactions between ethnic groups are a panacea to achieve social cohesion between individuals or groups [48,49], while appropriate design and management of marketplaces often attracts a larger percentage of visits from residents and subjective places for human interaction [50]. ...
Purpose– The purpose of this paper is determining the level of social interaction that occurs in rural community using markets as an attractor for residents. Design/methodology/approach- A mixed method approach (questionnaires and interviews) was used to obtain data from the market users. The mean score which was used in rating the level of interaction and the spaces where interaction occurred was calculated using descriptive statistics. Findings – The analysed data showed that good social interaction occurs within some places in both planned and unplanned rural markets. Research limitations/implications– The data used for the study was obtained from a rural market that serves other communities, the result could have been more revealing if other rural markets with different demography were included. However, the findings added to the expanding knowledge of user centred design of buildings and public spaces, by presenting the users perception on social interaction in a rural market that is organic in its design. The finding would also help shape the view of architects in researching user behaviours for public spaces. Practical implications– The perception of professionals in the built environment that rural communities cannot impact knowledge is discredited by the findings of the study. Practical inferences can be drawn from the study by the professionals and academics. The study findings shows that a market is a major point of attraction in a community and social interactions can be greatly affected with the type, arrangement pattern and nature of spaces provided within the market. The finding also revealed that even in a seemly organically evolved market there exists some form of social interaction spaces within it. Originality/value- The study explored markets as an attractor for social interaction and rank the spaces used for interaction while determining the level of interaction and ability of the spaces towards improving social interaction.
... Em geral, a crítica à falta de uma reflexão mais substantiva dos mercados decorre do fato de que muitos estudiosos (Roth, 2018;Abramovay, 2004;Boyer, 1997;Stiglitz, 1989) explicam os mercados mais pelos seus efeitos do que pelas causas, do que resulta a falta de conhecimento sobre sua origem, quem os criou e como foram forjados. Esse vácuo foi um dos pontos de partida dos estudiosos da sociologia econômica (White, 1981;Swedberg, 2005;Lie, 1997) que se empenharam em preenchê-lo iniciando uma agenda de estudos para compreender os mercados, especialmente de onde vêm, onde se localizam, como se estruturam, quais os atores envolvidos e como se dão as assimetrias de poder entre eles. ...
The Inca Empire developed a sophisticated food production system, social organisation, and knowledge transmission without money or writing. The article introduces the concept of a barter economy structured through hierarchical cooperation and examines the Inca model from a practice-based (heuristical) perspective.
This paper provides an economic perspective on data-driven innovation in digital products, focusing on the role of complex experiments in measuring and improving social impact. The discussion highlights how tools and insights from economics contribute to each stage of the innovation process. Key contributions include identifying problems, developing theoretical frameworks, translating goals into measurable outcomes, analyzing historical data, and estimating counterfactual outcomes. The paper also surveys recently developed tools designed to address challenges in designing and analyzing data from complex experiments. (JEL A11, D83, D91, I20, L80, O31, Q16)
• ◦ This case study illustrates how a particular auction design, used for public procurement, can unintentionally provide fertile ground for bidding rings.
• ◦ Essentially, the average bid auction format awards the contract to the bidder whose bid is nearest to the average bid. The average bid auction format has been advocated in order to prevent contracts being awarded to bidders with unrealistically low bids that might result in low quality or ex post renegotiation.
• ◦ This case study shows how it facilitates collusion. The setting is the tendering of public work projects in Turin, Italy over 2000–2003 where subgroups of construction firms formed cartels and coordinated their bids to enhance their chance of winning the contract at an inflated price.
• ◦ To understand the ease with which bidders can collude when participating in an average bid auction, suppose the current expectation (in the absence of coordination) is that firms bid aggressively. In order to have a chance to win, a firm would have to submit a relatively low bid in order for it to be close to the average bid. Now consider firms forming a cartel. All they need to do is agree to submit high prices. That will reap higher profits and without the temptation to deviate as is present with the usual auction design where the contract is awarded to the lowest bidder. A firm that thinks about submitting a lower bid will move its bid farther away from the average bid and thus reduce its chances of winning. Once firms agree to submit high bids, such an agreement is self-enforcing. The average bid auction format thus makes collusion more likely because cartel stability is so easy to maintain.
• ◦ The case study also explores an incentive for a subset of firms to form its own coalition in order to increase their chances of winning. If it comprises enough firms, they can move the average bid up or down in a manner to cause their bids to be closer to the average bid than the bids of firms outside of their coalition. As a result, a collection of bidders can respond to a coalition by forming its own coalition. The proliferation of these coalitions is well documented for the Turin case.
• ◦ This understanding of cartel conduct is used to develop a marker for collusion based on the frequency of joint participation.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Market studies is a newly emerging field dedicated to understanding the origins, core concepts, theories and methods currently being used and developed to examine markets in the making. Providing a unique overview that introduces, positions and develops this highly fertile area of research, Market Studies is the first book to consolidate its themes, tools and methods in a single, comprehensive volume. Topics covered include: market organization and design; performativity in and around markets; valuation; market places and spaces; methods that may be utilized in studying markets; the field's relation to adjacent disciplines; the future of markets. Deploying a sensitivity for the socio-material constitution of markets, the authors put market practices at the centre of inquiry and offer insights into the future and potential impact of market studies research. The contemporary, practical and interdisciplinary approach is strengthened by multiple examples of original empirical research into markets.
Grain price seasonality in Kebbi state
We adopt the notion of the farsighted stable set to determine which matchings are stable when agents are farsighted in matching markets with couples. We show that a singleton matching is a farsighted stable set if and only if the matching is stable. Thus, matchings that are stable with myopic agents remain stable when agents become farsighted. Examples of farsighted stable sets containing multiple non-stable matchings are provided for markets with and without stable matchings. For couples markets where the farsighted stable set does not exist, we propose the DEM farsighted stable set to predict the matchings that are stable when agents are farsighted.
Artificial intelligence (AI) is anticipated to reshape the economy by revolutionizing human interaction with technology. Despite its significance, research endeavors in the field of economics remain relatively limited. In this editorial, we outline the articles featured in a Virtual Special Issue designed to expand the scope of inquiry for economists examining AI and its implications. We position these articles within the current economic literature and propose an agenda for further research aimed at fostering a more varied understanding of the impacts, implications, and challenges of AI technologies at the intersection with economic activity.
In this chapter, Aoki’s theory of institutions is developed with Bourdieu’s concepts of field, habitus, and symbolic capital as an alternative to the disembodied economic and game-theoretic approach to institutions as media of information. This is inspired by the Hegelian view of institutions as “second nature,” which is analyzed as inward embodiment of the social world. This chapter highlights the role of power as necessary to enforce institutions, and the role of institutions in creating agential power that is allocated differentially across people, thereby also producing inequality. The model integrates Searle’s notion of institution in terms of metaphor and conceptual blending, and articulates two forms of intentionality, distinguishing I- and We- modes in analyzing agential power. This general approach leads to Fiske’s four types of social relationships, the We-mode defining Community, and the I-mode Hierarchy, Reciprocity, and Market. These four types relate to different cognitive scaling operations and important embodied schemas, respectively the CONTAINER, VERTICAL, BALANCE, and RESOURCE schemas.
This paper examines the incentive to register for deceased organ donation under alternative organ allocation priority rules, which may prioritize registered donors and/or patients with higher valuations for organ transplantation. Specifically, the donor priority rule grants higher priority on the organ waiting list to those who have previously registered as donors. The dual-incentive priority rules allocate organs based on donor status, followed by individual valuations within the same donor status, or vice versa. Both theoretical and experimental results suggest that the efficacy of the donor priority rule and the dual-incentive priority rules critically depends on the information environment. When organ transplantation valuations are unobservable prior to making donation decisions, the hybrid dual-incentive rules generate higher donation rates. In contrast, if valuations are observable, the dual-incentive priority rules create unbalanced incentives between high- and low-value agents, potentially undermining the efficacy of the hybrid dual-incentive rules in increasing overall donation rates.
This paper was accepted by Marie Claire Villeval, behavioral economics and decision analysis.
Funding: This research is supported by the National Natural Science Foundation of China [Grants 72173103, 72373127, and 71988101], the Singapore Ministry of Education (MOE) Academic Research Fund Tier 1 [RG57/20], and the Open Foundation of Key Laboratory of Interdisciplinary Research of Computation and Economics (Shanghai University of Finance and Economics), Ministry of Education of China.
Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2022.01530 .
Online platforms have profoundly changed the organization of work in many economic sectors, and the sex industry is no exception. Webcam sex platforms, in particular, host large and heterogeneous populations of workers who are not formally employed and rely heavily on algorithmic systems to manage this workforce. These systems are often said to produce or reinforce unpredictable and unequal winner-take-all effects, contributing to economic pressure and precarity. Most research trying to empirically assess these claims has focused on single platforms and on the experiences of limited samples of regular workers, excluding more sporadic performers that nonetheless compete for visibility within the same ranking systems. In this article, we seek to address these limitations through a multi-platform study based on systematic ranking data collected by scraping the complete homepages of five webcam platforms over 11 weeks. The article proceeds in four steps. We first discuss existing work on algorithmic workplace management and webcam sex platforms. We then introduce the case studies, present our empirical approach, and discuss ethical considerations. The findings section is organized around two complementary lines of inquiry: an examination of visibility distributions across our sample of websites, as well as their connection with viewer numbers, and an exploration of the relationship between visibility and labor practices, which allows us to link performer availability to ranking outcomes. We conclude by highlighting the substantial differences between these designed marketplaces and discuss repercussions for both webcam sex research and the broader field of platform studies.
Current refugee resettlement processes account for neither the preferences of refugees nor the priorities of hosting communities. We introduce a new framework for matching with multidimensional knapsack constraints that captures the (possibly multidimensional) sizes of refugee families and the capacities of communities. We propose four refugee resettlement mechanisms and two solution concepts that can be used in refugee resettlement matching under various institutional and informational constraints. Our theoretical results and simulations using refugee resettlement data suggest that preference-based matching mechanisms can improve match efficiency, respect priorities of communities, and incentivize refugees to report where they would prefer to settle. (JEL C78, D82, J15, J18)
Over the past decades, the cannabis policy paradigm has been changing with most Western countries allowing its medical use and few jurisdictions where any adults can legally purchase it. The basic question is no longer whether countries should legalize cannabis, but which policy should be adopted in order to maximize social welfare. While a basic legal guidance emerged from the experience of other addictive substances, cannabis regulation is a more complex policy challenge, given its product heterogeneity and the differential harms caused by its consumption across different types of users. When over-consumed, it can inflict harm to the users and others, whereas when is used as a medicine, it can improve the quality of life. In the midst of these extreme purposes, there is the spectrum of wellness and the industrial uses of potential economic and environmental interest. The thesis explores a major distinctive feature which characterizes the legal framework of cannabis distribution : the existence of multiple interrelated markets operating with different regulations, but that can often satisfy consumer demand interchangeably. Based on the expected purpose of use, analogous cannabis-based products arc supplied in different distributional channels characterized by substantially different transaction costs for consumers. It is the first attempt to systematically examine cannabis markets comprehensively and to consider how supply architecture and taxation (or subsidies) of one market can affect the others creating market distortions. Its contribution will extend to the institutionalization of other commodities with intoxicating potential, such as other forms of herbal medicine.
The economic discipline plays a performative role in constructing the moral order of market society. Yet, little attention has been paid to what economists explicitly regard as moral or how they conceive of morality. This article reflects a recent attempt to put morals into economics, that is, to introduce morality as a research topic in behavioural and experimental economics. It maps three research programs that theorize the moral economy. The programs emphasize the moral foundations of market society, the moral limits of market expansion, and the moral consequences of market trading and, thus, appear irreconcilable with classifications of economists as market enthusiasts or moral agnostics. At the same time, however, the literature centres on an “economized” form of morality that is corrective to market inefficiencies, attributed to the responsibility of the individual, and expressed in rational terms. In doing so, this literature contributes to redefining moral problems in economic terms.
Territorial food markets and governance have emerged as a key mechanism
for the design and implementation new food systems and policies aimed at
sustainable cities. However, the many existing policies tend to overlook the
way food markets and supply strategies work. This chapter analyses governance
in traditional agri-food markets in Brazil, aiming to demonstrate how,
in different contexts, the economic interactions between actors are embedded
in a set of social institutions (cultural values), which define modes of governance,
participation in the markets and can be potential to fostering new
(sustainable) rural-urban relations. These institutions challenge and compete
with formal regulatory requirements imposed by the public authorities, which
often disrupt and/or inhibit the development of local and traditional production
and consumption practices, posing obstacles to the fostering rural-urban
relations and the construction of solid local policies for food supply. Empirical
data refer to three traditional Brazilian markets: the Feira do Pequeno
Produtor in Passo Fundo, located in the South of Brazil, the Feira Central de
Campina Grande and the Feira de Caruaru, both located in the Northeast of
the country. The results point to the necessity and centrality to cities food
supply policies recognise, encourage and institutionalise these markets traditional
institutions in order to overcome supermarketisation and consolidate
sustainable food systems. These process could be able to remove traditional
markets from marginalise, promoting not only their survival, but their growth
and consolidation as a source of decent work, healthy food and new sustainable
rural-urban relationships
This piece in the Milestones series is dedicated to the paper coauthored by David Gale and Lloyd Shapley and published in 1962 under the title “College admissions and the stability of marriage” on the American Mathematical Monthly.
Until recently, the commercial determinants have remained largely absent from conceptual frameworks of the social determinants of health, despite their clear importance to health and well-being. This is especially challenging because even a single large industry sector can have a profound, intersectional impact on sociocultural and physical environments. Such a sector can affect everything from the consumption patterns of a particular product and the health and social problems caused by those patterns of consumption to the social norms surrounding when and how much of it people use, the tax and regulatory frameworks surrounding it, the science regarding its harms and benefits, how policymakers view the problem and its causes, and the framing of possible solutions. The commercial determinants of health are emerging as a field of study in their own right; however, currently, there is no book that seeks to synthesize current definitions, frameworks, and empirical research into a coherent research and translational entity and to help the field make the leap to its next level. This book aims to fill that gap by making the case for why commercial determinants of health matter and discussing what is known about them, examples of the ways in which they affect population health, and ways to research and influence them as the field continues to grow and evolve.
Operations Management (OM) has evolved to its current status due to the contributions of researchers in many fields including economics, finance, behavioral sciences, operations research/management science, mathematics, statistics, and computer science. Many of these contributors are Nobel laureates – winners of the highest academic award. The Nobel Memorial Prize in Economic Sciences is awarded to those with monumental works in economics. Yet some winners have also made contributions to operations management, the field of this journal. Others have developed important concepts and techniques that have made an enormous impact on OM research. Here we describe the OM contributions as well as the impactful concepts of these Laureates. This article is protected by copyright. All rights reserved
Millions of volunteers take part in clinical trials every year. This is unsurprising, given that clinical trials are often much more lucrative than other types of unskilled work. When clinical trials offer very high pay, however, some people consider them repugnant. To understand why, we asked 1,428 respondents to evaluate a hypothetical medical trial for a new Ebola vaccine offering three different payment amounts. Some respondents (27%) used very high pay (£10,000) as a cue to infer the potential risks the clinical trial posed. These respondents were also concerned that offering £10,000 was coercive— simply too profitable to pass up. Both perceived risk and coercion in high-paying clinical trials shape how people evaluate these trials. This result was robust within and between respondents. The link between risk and repugnance may generalize to other markets in which parties are partially remunerated for the risk they take and contributes to a more complete understanding of why some market transactions appear repugnant.
Once refugees are granted protection in a particular host country, there is little concern about where in that country they are settled. Yet this matters enormously for refugees' chances to prosper in the new country and for the willingness of the local community to welcome them. We propose a centralized clearinghouse-a 'two-sided matching system'-to match refugees with localities. Drawing on the success of matching in domains such as public school choice, we outline principles underlying matching-system design, and illustrate in general terms how they could be applied to refugee protection. This matching system respects the priorities and capacities of localities and gives agency to refugees. As an example, we describe in detail how such a system could work to meet the British government's commitment to resettle 20,000 Syrian refugees by 2020. © The Author 2017. Published by Oxford University Press. All rights reserved.
This article updates the qualitative research on Iran reported in the 2012 article by Tong et al. “The experiences of commercial kidney donors: thematic synthesis of qualitative research” (Tong et al. in Transpl Int 25:1138–1149, 2012). The basic approach used in the Tong et al. article is applied to a more recent and more comprehensive study of Iranian living organ donors, providing a clearer picture of what compensated organ donation is like in Iran since the national government began regulating compensated donation. Iran is the only country in the world where kidney selling is legal, regulated, and subsidized by the national government. This article focuses on three themes: (1) coercion and other pressures to donate, (2) donor satisfaction with their donation experience, and (3) whether donors fear social stigma. We found no evidence of coercion, but 68% of the paid living organ donors interviewed felt pressure to donate due to extreme poverty or other family pressures. Even though 27% of the living kidney donors interviewed said they were satisfied with their donation experience, 74% had complaints about the donation process or its results, including some of the donors who said they were satisfied. In addition, 84% of donors indicated they feared experiencing social stigma because of their kidney donation.
Data-driven refugee assignment
The continuing refugee crisis has made it necessary for governments to find ways to resettle individuals and families in host communities. Bansak et al. used a machine learning approach to develop an algorithm for geographically placing refugees to optimize their overall employment rate. The authors developed and tested the algorithm on segments of registry data from the United States and Switzerland. The algorithm improved the employment prospects of refugees in the United States by ∼40% and in Switzerland by ∼75%.
Science , this issue p. 325
Electricity markets are designed to provide reliable electricity at least cost to consumers. This paper describes how the best designs satisfy the twin goals of short-run efficiency-making the best use of existing resources-and long-run efficiency-promoting efficient investment in new resources. The core elements are a day-ahead market for optimal scheduling of resources and a real-time market for security-constrained economic dispatch. Resources directly offer to produce per their underlying economics and then the system operator centrally optimizes all resources to maximize social welfare. Locational marginal prices, reflecting the marginal value of energy at each time and location, are used in settlement. This spot market provides the basis for forward contracting, which enables participants to manage risk and improves bidding incentives in the spot market. There are important differences in electricity markets around the world, reflecting different economic and political settings. Electricity markets are undergoing a transformation as the resource mix transitions from fossil fuels to renewables. The main renewables, wind and solar, are intermittent, have zero marginal cost, and lack inertia. These challenges can be met with battery storage and improved demand response. However, good governance is needed to assure the market rules adapt to meet new challenges.
Market design seeks to translate economic theory and analysis into practical solutions to real-world problems. By redesigning both the rules that guide market transactions and the infrastructure that enables those transactions to take place, market designers can address a broad range of market failures. In this paper, we illustrate the process and power of market design through three examples: the design of medical residency matching programmes; a scrip system to allocate food donations to food banks; and the recent 'Incentive Auction' that reallocated wireless spectrum from television broadcasters to telecoms. Our lead examples show how effective market design can encourage participation, reduce gaming, and aggregate information, in order to improve liquidity, efficiency, and equity in markets. We also discuss a number of fruitful applications of market design in other areas of economic and public policy.
Coordinated single-offer school assignment systems are a popular education reform. We show that uncoordinated offers in NYC's school assignment mechanism generated mismatches. One-third of applicants were unassigned after the main round and later administratively placed at less desirable schools. We evaluate the effects of the new coordinated mechanism based on deferred acceptance using estimated student preferences. The new mechanism achieves 80 percent of the possible gains from a no-choice neighborhood extreme to a utilitarian benchmark. Coordinating offers dominates the effects of further algorithm modifications. Students most likely to be previously administratively assigned experienced the largest gains in welfare and subsequent achievement.
Numerous kidney exchange (kidney paired donor (KPD)) registries in the U.S have gradually shifted to high frequency match-runs, raising the question of whether this harms the number of transplants. We conduct simulations using clinical data from two KPD registries—the Alliance for Paired Donation, which runs multi-hospital exchanges, and Methodist San Antonio, which runs single center exchanges–to study how the frequency of match-runs impacts the number of transplants and the average waiting times. We simulate the options facing each of the two registries by repeated resampling from their historical pools of patient-donor pairs and non-directed donors, with arrival and departure rates corresponding to the historical data. We find that longer intervals between match-runs do not increase the total number of transplants, and that prioritizing highly sensitized patients is more effective than waiting longer between match-runs for transplanting highly sensitized patients. While we do not find that frequent match-runs result in fewer transplanted pairs we do find that increasing arrival rates of new pairs improves both the fraction of transplanted pairs and waiting times.
It has been suggested that the distribution of refugees over host countries can be made more fair or efficient if policy makers take into account not only numbers of refugees to be distributed but also the goodness of the matches between refugees and their possible host countries. There are different ways to design distribution mechanisms that incorporate this practice, which opens up a space for normative considerations. In particular, if the mechanism takes countries’ or refugees’ preferences into account, there may be trade-offs between satisfying their preferences and the number of refugees distributed. This article argues that, in such cases, it is not a reasonable policy to satisfy preferences. Moreover, conditions are given which, if satisfied, prevent the trade-off from occurring. Finally, it is argued that countries should not express preferences over refugees, but rather that priorities for refugees should be imposed, and that fairness beats efficiency in the context of distributing asylum. The framework of matching theory is used to make the arguments precise, but the results are general and relevant for other distribution mechanisms such as the relocations currently in effect in the European Union.
Previously [1,2], we described how a Filipino husband-and-wife patient–donor pair were included in an American kidney exchange.1,2 Delmonico and Ascher object in the strongest terms.³ They write that ethical Global Kidney Exchange (GKE) with patient–donor pairs from the developing world “is not feasible when the culture is so experienced with organ sales.”
We are writing in opposition to the proposed Global Kidney Exchange that would solicit living donors from economically underdeveloped countries such as Mexico, the Philippines, Kenya, India and Ethiopia (1). The experience of representatives from countries such as India and Mexico reported at the Vatican Pontifical Academy of Sciences Summit on the topic of organ trafficking in February, 2017 was very clear-these locations are sites of organ trafficking (2-6). The capacity of this project to assure that targeted donors in underdeveloped countries will be emotionally -related, free of coercion and fully informed of risk, is not feasible when the culture is so experienced with organ sales. This article is protected by copyright. All rights reserved.
Unraveling, the excessively early matching of future workers to employers, is a pervasive phenomenon in entry-level labor markets that leads to hiring decisions based on severely incomplete information. We provide a model of unraveling in one-to-one matching markets for prestigious positions. Its distinguishing feature is that the market operates over an extended time period during which information about potential matches arrives gradually. We find that unraveling causes potentially thick markets to spread thinly over a long time period. In equilibrium, an employers desirability is correlated neither with the time at which they hire, nor with the expected productivity of their matched worker. Unraveling thus significantly redistributes welfare among employers compared to a pairwise stable match. We study policies that manipulate the availability of information about students and show that they are effective only if they provide a sudden surge in information. Our main application is the market for U.S. federal appellate court clerks, a significant input into the efficiency of the justice system. Consistent with the model, hiring times in our dataset are spread over a period of six months and are uncorrelated with the desirability of a judge as an employer.
We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30 to 63 percent. First, we document that the market is fragmented and inefficient; most transplants are arranged by hospitals instead of national platforms. Second, we propose a model to show two sources of inefficiency: hospitals only partly internalize their patients’ benefits from exchange, and current platforms suboptimally reward hospitals for submitting patients and donors. Third, we calibrate a production function and show that individual hospitals operate below efficient scale. Eliminating this inefficiency requires either a mandate or a combination of new mechanisms and reimbursement reforms. (JEL D24, D47, I11)
We study the interplay between autonomous transportation, carpooling, and road pricing. We discuss how improvements in these technologies, and interactions among them, will affect transportation markets. Our main results show how to achieve socially efficient outcomes in such markets, taking into account the costs of driving, road capacity, and commuter preferences. An important component of the efficient outcome is the socially optimal matching of carpooling riders. Our approach shows how to set road prices and how to share the costs of driving and tolls among carpooling riders in a way that implements the efficient outcome.
This paper investigates the problem of finding housing for refugees once they have been granted asylum. In particular, it is demonstrated that market design can play an important role in a partial solution to the problem. More specifically, the paper investigates a specific matching system and proposes an easy‐to‐implement mechanism that finds an efficient stable maximum matching. Such a matching guarantees that housing is efficiently provided to a maximum number of refugees and that no refugee prefers some landlord to their current match when, at the same time, that specific landlord prefers that refugee to his current match.
This article is protected by copyright. All rights reserved.
Many two-sided matching markets, from labor markets to school choice programs, use a clearinghouse based on the applicant-proposing deferred acceptance algorithm, which is well known to be strategy-proof for the applicants. Nonetheless, a growing amount of empirical evidence reveals that applicants misrepresent their preferences when this mechanism is used. This paper shows that no mechanism that implements a stable matching is obviously strategy-proof for any side of the market, a stronger incentive property than strategy-proofness that was introduced by Li (2017). A stable mechanism that is obviously strategy-proof for applicants is introduced for the case in which agents on the other side have acyclical preferences.
Most governments in the world, including the U.S., prohibit sex work. Given these types of laws rarely change and are fairly uniform across regions, our knowledge about the impact of decriminalizing sex work is largely conjectural. We exploit the fact that a Rhode Island District Court judge unexpectedly decriminalized indoor sex work to provide causal estimates of the impact of decriminalization on the composition of the sex market, reported rape offences, and sexually transmitted infections. While decriminalization increases the size of the indoor sex market, reported rape offences fall by 30% and female gonorrhoea incidence declines by over 40%. © The Author 2017. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.
We attribute the recent quadrupling of heroin death rates to the August 2010 reformulation of an oft-Abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater prereformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality: each prevented opioid death was replaced with a heroin death. © 2019 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Kidney exchange platforms serve patients who need a kidney transplant and who have a willing, but incompatible, donor. These platforms match patients and donors to produce transplants. This paper documents operational details of the three largest platforms in the United States. It then uses the framework developed in Agarwal et al. (2017) to examine how practical details influence platform productivity. The results show that reducing frictions in accepting proposed matches, frequent matching, and encouraging altruistic donors are important ways in which a platform can increase its productivity.
Gale and Shapley have an algorithm for assigning students to universities which gives each student the best university available in a stable system of assignments. The object here is to prove that students cannot improve their fate by lying about their preferences. Indeed, no coalition of students can simultaneously improve the lot of all its members if those outside the coalition state their true preferences.
Iran is the only country in the world currently with a legalized compensated kidney donation system, in which kidney sellers are matched with end-stage renal disease patients through a regulated process. From a practical point of view, this model provides an abundance of kidneys for transplantation as opposed to the American model that relies on altruistic donation. The major concern about adopting the Iranian model is the possibility of exploitation. A large body of literature exists on this topic, but few have focused on its cultural aspects. This paper sheds light on the cultural implications of the Iranian model by providing empirical evidence on the social stigmas against kidney sale in Iran. We claim that these stigmas act as barriers to entry to the supply market of kidneys. Due to the conditions created by social stigmas, kidney sellers are forced to consider not only monetary rewards but also cultural factors. Thus, they tend to be more cautious and try to avoid impulsive decisions. Such social stigmas act as unofficial regulatory forces to keep kidney sale as the last resort for the poor, to diversify the supply market by age, and to stretch the decision-making process in the absence of a mandatory waiting period for transplantation.
The adverse effects of benzodiazepine overuse, misuse, and addiction continue to go largely unnoticed. Efforts to reduce overprescribing of opioids and educate the medical and lay communities about their risks could be expanded to target benzodiazepines as well.
Living donation provides important access to organ transplantation, which is the optimal therapy for patients with end-stage liver or kidney failure. Paired exchanges have facilitated thousands of kidney transplants and enable transplantation when the donor and recipient are incompatible. However, frequently willing and otherwise healthy donors have contraindications to donation of the organ that their recipient needs. Trans-organ paired exchanges would enable a donor associated with a kidney recipient to donate a lobe of liver and a donor associated with a liver recipient to donate a kidney. This paper explores some of the ethical concerns that trans-organ exchange might encounter including unbalanced donor risks, the validity of informed consent, and effects on deceased organ donation.
How prevalent is preference misrepresentation in matching procedures that incentivize truth-telling, and who pursues it? To address these questions, we administered an online experiment to 1,714 medical students immediately after their participation in the medical residency match. When placed in an analogous matching task, we find that 23% of match participants act on an incorrect belief that the algorithm can be gamed. Better students are less likely to make these mistakes, due to both higher cognitive ability and a reduced propensity to game when in a strategically advantageous position. We explore additional determinants of gaming attempts, including overconfidence, expectations, advice, and trust. We discuss the implications of this behavior for the design of allocation mechanisms and the social welfare in markets that use them.
Cannabinoids combined with opioids produce synergistic antinociceptive effects, decreasing the lowest effective antinociceptive opioid dose (i.e., opioid-sparing effects) in laboratory animals. Although pain patients report greater analgesia when cannabis is used with opioids, no placebo-controlled studies have assessed the direct effects of opioids combined with cannabis in humans or the impact of the combination on abuse liability. This double-blind, placebo-controlled, within-subject study determined if cannabis enhances the analgesic effects of low dose oxycodone using a validated experimental model of pain and its effects on abuse liability. Healthy cannabis smokers (N = 18) were administered oxycodone (0, 2.5, and 5.0 mg, PO) with smoked cannabis (0.0, 5.6% Δ9tetrahydrocannabinol [THC]) and analgesia was assessed using the Cold-Pressor Test (CPT). Participants immersed their hand in cold water (4 °C); times to report pain (pain threshold) and withdraw the hand from the water (pain tolerance) were recorded. Abuse-related effects were measured and effects of oxycodone on cannabis self-administration were determined. Alone, 5.0 mg oxycodone increased pain threshold and tolerance (p ≤ 0.05). Although active cannabis and 2.5 mg oxycodone alone failed to elicit analgesia, combined they increased pain threshold and tolerance (p ≤ 0.05). Oxycodone did not increase subjective ratings associated with cannabis abuse, nor did it increase cannabis self-administration. However, the combination of 2.5 mg oxycodone and active cannabis produced small, yet significant, increases in oxycodone abuse liability (p ≤ 0.05). Cannabis enhances the analgesic effects of sub-threshold oxycodone, suggesting synergy, without increases in cannabis's abuse liability. These findings support future research into the therapeutic use of opioid-cannabinoid combinations for pain.
Kidney exchange, where candidates with organ failure trade incompatible but willing donors, is a life-saving alternative to the deceased donor waitlist, which has inadequate supply to meet demand. While fielded kidney exchanges see huge benefit from altruistic kidney donors (who give an organ without a paired needy candidate), a significantly higher medical risk to the donor deters similar altruism with livers. In this paper, we begin by exploring the idea of large-scale liver exchange, and show on demographically accurate data that vetted kidney exchange algorithms can be adapted to clear such an exchange at the nationwide level. We then propose cross-organ donation where kidneys and livers can be bartered for each other. We show theoretically that this multi-organ exchange provides linearly more transplants than running separate kidney and liver exchanges. This linear gain is a product of altruistic kidney donors creating chains that thread through the liver pool; it exists even when only a small but constant portion of the donors on the kidney side of the pool are willing to donate a liver lobe. We support this result experimentally on demographically accurate multi-organ exchanges. We conclude with thoughts regarding the fielding of a nationwide liver or joint liver-kidney exchange from a legal and computational point of view.
Within the last decade, the use of living-donor kidney exchanges for transplants has emerged as a cross-disciplinary success for medical doctors and ethicists, market design economists, and computer scientists. This paper describes the fronts on which these efforts have been successful and what needs to be done further to increase their impact. This paradigm is also partially being applied to liver exchanges. There are other organs for which living donation is possible and gains from exchange can be much bigger than for kidneys. Recent academic work on single-graft liver and dual-donor organ exchanges for lobar lung, dual-graft liver, and simultaneous liver-kidney transplantation are also discussed.
Using national data on opioid prescriptions written by physicians from 2006 to 2014, we uncover a striking relationship between opioid prescribing and medical school rank. Even within the same specialty and practice location, physicians who completed their initial training at top medical schools write significantly fewer opioid prescriptions annually than physicians from lower-ranked schools. Additional evidence suggests that some of this gradient represents a causal effect of education rather than patient selection across physicians or physician selection across medical schools. Altering physician education may therefore be a useful policy tool in fighting the current epidemic. © 2018 American Society of Health Economists and Massachusetts Institute of Technology.
The most prevalent notions of fairness in machine learning are statistical definitions: they fix a small collection of pre-defined groups, and then ask for parity of some statistic of the classifier across these groups. Constraints of this form are susceptible to (intentional or inadvertent) "fairness gerrymandering", in which a classifier appears to be fair on each individual group, but badly violates the fairness constraint on one or more structured subgroups defined over the protected attributes.. We propose instead to demand statistical notions of fairness across exponentially (or infinitely) many subgroups, defined by a structured class of functions over the protected attributes. This interpolates between statistical definitions of fairness, and recently proposed individual notions of fairness, but it raises several computational challenges. It is no longer clear how to even audit a fixed classifier to see if it satisfies such a strong definition of fairness. We prove that the computational problem of auditing subgroup fairness for both equality of false positive rates and statistical parity is equivalent to the problem of weak agnostic learning --- which means it is computationally hard in the worst case, even for simple structured subclasses. However, it also suggests that common heuristics for learning can be applied to successfully solve the auditing problem in practice. We then derive an algorithm that provably converges to the best fair distribution over classifiers in a given class, given access to oracles which can solve the agnostic learning and auditing problems. The algorithm is based on a formulation of subgroup fairness as fictitious play in a two-player zero-sum game between a Learner and an Auditor. We implement our algorithm using linear regression as a heuristic oracle, and show that we can effectively both audit and learn fair classifiers on real datasets.
A difficult issue for organizations is how to assign valuable resources across competing opportunities. This work describes how Feeding America allocates about 300 million pounds of food a year to over two hundred food banks across the United States. It does so in an unusual way: in 2005, it switched from a centralized queuing system, where food banks would wait their turn, to a market based mechanism where they bid daily on truckloads of food using a “fake” currency called shares. The change and its impact are described here, showing how the market system allowed food banks to sort based on their preferences.
This paper studies the effects of legal street prostitution zones on registered and perceived crime. We exploit a unique setting in the Netherlands where these tippelzones were opened in nine cities under different regulation systems. Our difference-in-difference analysis of 25 Dutch cities between 1994-2011 shows that opening a tippelzone decreases registered sexual abuse and rape by about 30-40 percent in the first two years. For cities which enforced licensing in tippelzones, we also find reductions in drug-related crime and long-term effects on sexual assaults. Effects on perceived drug nuisance depend on the regulation system and the proximity of respondents to the tippelzone.
A strategy is obviously dominant if, for any deviation, at any information set where both strategies first diverge, the best outcome under the deviation is no better than the worst outcome under the dominant strategy. A mechanism is obviously strategy-proof (OSP) if it has an equilibrium in obviously dominant strategies. This has a behavioral interpretation: a strategy is obviously dominant if and only if a cognitively limited agent can recognize it as weakly dominant. It also has a classical interpretation: a choice rule is OSP-implementable if and only if it can be carried out by a social planner under a particular regime of partial commitment.
The combinatorial clock auction (CCA) is an important recent innovation in auction design that has been utilised for many spectrum auctions worldwide. While the theoretical foundations of the CCA are described in a growing literature, many of the practical implementation choices are neglected. In this article, we examine some of the most critical practical decisions for a regulator implementing the CCA. Topics include: implementation of reserve prices; endogenous band plans; supplementary round activity rules; competition policy; bidding languages; and allocation of the core burden. We illustrate our discussion with examples from recent spectrum auctions that used the CCA format.
Drug overdose accounted for 52 404 deaths in the United States in 2015,¹ which are more deaths than for AIDS at its peak in 1995. Provisional data from the US Centers for Disease Control and Prevention (CDC) indicate drug overdose deaths increased again from 2015 to 2016 by more than 20% (from 52 898 deaths in the year ending in January 2016 to 64 070 deaths in the year ending in January 2017).² Increases are greatest for overdoses related to the category including illicitly manufactured fentanyl (ie, synthetic opioids excluding methadone), which more than doubled, accounting for more than 20 000 overdose deaths in 2016 vs less than 10 000 deaths in 2015. This difference is enough to account for nearly all the increase in drug overdose deaths from 2015 to 2016.
A growing number of school districts use centralized assignment mechanisms to allocate school seats in a manner that reflects student preferences and school priorities. Many of these assignment schemes use lotteries to ration seats when schools are oversubscribed. The resulting random assignment opens the door to credible quasi-experimental research designs for the evaluation of school effectiveness. Yet the question of how best to separate the lottery-generated randomization integral to such designs from non-random preferences and priorities remains open. This paper develops easily-implemented empirical strategies that fully exploit the random assignment embedded in a wide class of mechanisms, while also revealing why seats are randomized at one school but not another. We use these methods to evaluate charter schools in Denver, one of a growing number of districts that combine charter and traditional public schools in a unified assignment system. The resulting estimates show large achievement gains from charter school attendance. Our approach generates efficiency gains over ad hoc methods, such as those that focus on schools ranked first, while also identifying a more representative average causal effect. We also show how to use centralized assignment mechanisms to identify causal effects in models with multiple school sectors.
The essays in this thesis span two important and related themes in development economics: understanding and relaxing constraints to small scale entrepreneurship and designing markets in environments with weak institutional enforcement. Methodologically, the essays marshal both theory and field experimentation to study these issues. In joint work with Ernest Liu, Chapter 1 offers a new explanation for why microcredit and other forms of informal finance have so far failed to catalyze business growth among small scale entrepreneurs in the developing world, despite their high return to capital. We present a theory of informal lending that highlights two features of informal credit markets that cause them to operate inefficiently. First, borrowers and lenders bargain not only over division of surplus but also over contractual flexibility (the ease with which the borrower can invest to grow her business). Second, when the borrower's business becomes sufficiently large she exits the informal lending relationship and enters the formal sector - an undesirable event for her informal lender. We show that in Stationary Markov Perfect Equilibrium these two features lead to a poverty trap and study its properties. The theory facilitates reinterpretation of a number of empirical facts about microcredit: business growth resulting from microfinance is low on average but high for businesses that are already relatively large, and microlenders have experienced low demand for credit. The theory features nuanced comparative statics which provide a testable prediction and for which we establish novel empirical support. Using the Townsend Thai data and plausibly exogenous variation to the level of competition Thai money lenders face, we show that as predicted by our theory, money lenders in high competition environments impose fewer contractual restrictions on their borrowers. We discuss robustness and policy implications. In work with Reshmaan Hussam and Natalia Rigol, Chapter 2 explores a different facet of small-scale entrepreneurship. The impacts of cash grants and access to credit are known to vary widely, but progress on targeting these services to high-ability, reliable entrepreneurs is so far limited. We report on a field experiment in Maharashtra, India that assesses (1) whether community members have information about one another that can be used to identify high-ability microentrepreneurs, (2) whether organic incentives for community members to misreport their information obscure its value, and (3) whether simple techniques from mechanism design can be used to realign incentives for truthful reporting. We asked 1,380 respondents to rank their entrepreneur peers on various metrics of business profitability and growth potential. We also randomly distributed cash grants of about $100 to measure their marginal return to capital. We find that the information provided by community members is predictive of many key business and household characteristics including marginal return to capital. While on average the marginal return to capital is modest, preliminary estimates suggest that entrepreneurs given a community rank one standard deviation above the mean enjoy an 8.8% monthly marginal return to capital and those ranked two standard deviations above the mean enjoy a 13.9% monthly return. When respondents are told their reports influence the distribution of grants, we find a considerable degree of misreporting in favor of family members and close friends, which substantially diminishes the value of reports. Finally, we find that monetary incentives for accuracy, eliciting reports in public, and cross-reporting techniques motivated by implementation theory all significantly improve the accuracy of reports. In Chapter 3 I highlight an under appreciated facet of centralized market design of critical importance to developing economies with weak contract enforcement: often market designers cannot force participants to join a centralized market. I present a theory in which centralizing a market is akin to designing a mechanism to which people may voluntarily sign away their decision rights and propose a new desideratum for mechanism and market design, termed e-dominant individual rationality. Loosely, E-dominant individual rationality guarantees participation by assuring participants that each decentralized strategy is approximately dominated by a centralized strategy. I then provide two positive results about centralizing large markets. The first offers a novel justification for stable matching mechanisms and an insight to guide their design to achieve E-dominant individual rationality. The second result demonstrates that in large games, any mechanism with the property that every player wants to use it conditional on sufficiently many others using it as well can be modified to satisfy E-dominant individual rationality while preserving its behavior conditional on sufficient participation. The modification relies on a class of mechanisms we refer to as random threshold mechanisms and resembles insights from the differential privacy literature.