Saturday, May 23, 2015

Ali Hortaçsu talks to the Turkish American Scientists & Scholars Association about market design

A Conversation with Ali Hortaçsu

"Our guest on this issue of The Bridge is Ali Hortacsu, Ralph and Mary Otis Isham Professor of Economics, University of Chicago.

The Bridge : Could you please give us a brief summary of your background?

Ali Hortaçsu : I was born in Istanbul in 1974 and grew up near Boğaziçi University where my parents are (emeritus) professors of chemical engineering. I went to Robert College for secondary school, and attended Stanford University, where I got my B.S. and M.S. in Electrical Engineering and my Ph.D. in Economics. I joined the University of Chicago Department of Economics as an assistant professor in 2001. I am currently the Ralph and Mary Otis Isham Professor of Economics there.

T.B. :  Could you also summarize your studies/research?  

A. H. : Most of my research falls under the rubric of "market design." Most economists believe markets are a wonderful method of allocating scarce resources and facilitating exchange. However, we know of many conditions under which markets can fail miserably; especially when market participants have incentives to strategize around the stated rules of the marketplace. What is needed, then, is a well-thought out re-writing of the "rules of the game" that takes into account the fact that many market participants are highly rational, strategic actors who will understand and game the system. How should we go about designing such rules? There is now an elegant and extremely well established body of theoretical knowledge on this topic, starting e.g. with the work of my Nobel winning colleague Roger Myerson. What we have learned over time, however, is that theory does not always give sharp answers as to what to do; the specific parameters of the particular system we are analyzing matters a lot. What I have tried to advance in my research is a "data driven" approach to market design, in which we utilize very detailed data from existing markets, estimate the relevant parameters using econometric/statistical methods, and simulate the parametrized behavior under a slew of alternative market rules to arrive at improved market designs. My collaborators and I have utilized this framework to help guide the design of many real world markets, including electricity markets, financial markets, online auctions, and even Internet matchmaking sites. I am also happy to see the econometric and simulation methods I have developed being used in many exciting applications in this domain.

T.B. :   Where do you see studies of your area of specialty in Turkey? What are your suggestions to improve the research in Turkey in this area?

A. H. :  "Market design" has a long and distinguished history in Turkey, especially with the theoretical work of Murat Sertel, Ahmet Alkan, and Semih Koray. Tayfun Sönmez and Utku Ünver, who are also pioneers in this area, did much of their trailblazing research while they were colleagues at Koç University. Although the tradition of market design research is very strong in Turkey, I think improving collaborations between theoretical researchers and market operators would be very beneficial from both the applied and scientific point of views."

Friday, May 22, 2015

Mohammad Akbarpour defends his dissertation

We welcomed a new market designer into the profession today:
Dave Kreps, Paul Milgrom, MOHAMMAD AKBARPOUR, Al Roth, Matt Jackson, Amin Saberi
I can't help noticing that most of the facial hair in this picture is gray and belongs to faculty members, while most of the head hair belongs to Mohammad:)

Welcome to the club, Mohammad!

The market for early book reviews: commercial, crowd sourced, and bootleg

My book, Who Gets What — and Why: The New Economics of Matchmaking and Market Design isn't due to be published until June 2.  But there are already some reviews, from commercial reviewers (Kirkus Reviews), from crowd sourced  reviews from Amazon, and at least one of what looks like a bootleg review from someone writing for Newsweek Europe, who may have ignored the label on the boxes of books warning folks to respect the June 2 "publication date" (the books will be in stores by then, so they are floating around).

The Amazon reviewing process is through what they call Vine Customer Review of Free Product, which they describe as follows:

"Amazon Vine invites the most trusted reviewers on Amazon to post opinions about new and pre-release items to help their fellow customers make informed purchase decisions. Amazon invites customers to become Vine Voices based on their reviewer rank, which is a reflection of the quality and helpfulness of their reviews as judged by other Amazon customers. Amazon provides Vine members with free products that have been submitted to the program by participating vendors. Vine reviews are the independent opinions of the Vine Voices. The vendor cannot influence, modify or edit the reviews. Amazon does not modify or edit Vine reviews, as long as they comply with our posting guidelines. A Vine review is identified with the green stripe Customer review from the Amazon Vine Program."

They classify the reviews as positive or critical, so far there are 15 positive and 1 critical, here's the critical one:
Showing 1-1 of 1 reviews (critical)show all reviews
1 of 3 people found the following review helpful
Format: HardcoverVine Customer Review of Free ProductWhat's this? )
Note: Advance Reading Copy

Alvin E. Roth, Nobel Prize laureate in economics has written a comfortable and conversational book explaining complex concepts of market design for the lay person. A more apt title, I think would be Problems, Challenges and Solutions in Market Design or Marketing Design for Dummies. “Who Gets What and Why” makes this book sound simple. It is not. It is also not for every casual reader with a mild curiosity.

Dr. Roth defines and explains the new economics of market design which he says brings science to matchmaking. He shows how market design helps solve problems that existing market places haven’t been able to solve naturally.

The author discusses his design of clearing houses for markets that are not commodity markets like: the kidney exchange; the medical labor market; new labor markets for Ph.D.s in economics and school choice systems in New York and Boston.

He defines the challenges and solutions and explains that to achieve efficient outcomes, market places need to make markets:

Thick: Those with enough potential transitions available at one time.
Congested: Enough time for offers to be made and/or accepted or rejected.
(and) Safe to participate in.

He defines matching markets where one can’t just choose, but must also be chosen.
He gives concrete examples to explain his concepts like attributes of three different kinds of restaurants. He discusses design inventions to make markets smarter, thicker and faster.

This book is detailed. It reads like Dr. Roth has taken pains to be clear about those details.

For more in dept discussion of market design you can watch Dr. Roth’s lecture at Stanford University on the web.

Thos book is not for everyone, but is worth the effort to gain new insight and understanding of markets and “Who Gets What.”

Thursday, May 21, 2015

Royal Economic Society-York Symposium and Mini-Courses on Game Theory, 21-23 May 2015

The 2015 RES-York Symposium and Mini-Courses on Game Theory, the 6th of the series of York Annual Symposium on Game Theory, will be held on 21-23 May 2015 at the Department of Economics and Related Studies, University of York, UK. 

The four keynote speakers of the Symposium (21-22 May 2015) are: 

Bhaskar Dutta (Warwick)

Stephen Morris (Princeton)

Michael Ostrovsky (Stanford)

Eyal Winter (HUJerusalem & Leicester)

The event is organised by the Micro Theory Research Cluster at the Department of Economics and Related Studies (DERS)University of York, and is jointly supported by the Royal Economic Society and the departmental Research Impact Support (RIS) Fund at DERS, University of York.

Right after the Symposium, on Saturday 23 May 2015, we will run two mini-courses delivered by Professor Bhaskar Dutta (Warwick) and Professor Michael Ostrovsky (Stanford), respectively.

Professor Bhaskar Dutta will deliver a mini-course on "Games on Networks". 

Professor Michael Ostrovsky will deliver a mini-course on the topic "Matching in Trading Networks". The background reading can be downloaded below at this webpage.

The schedule on Saturday 23 May 2015 is as follows.

9:00-10:30 Course by Prof. Bhaskar Dutta

10:45-12:15 Course by Prof. Michael Ostrovsky

12:15-13:15 Lunch

13:15-14:45 Course by Prof. Bhaskar Dutta

15:00-16:30 Course by Prof. Michael Ostrovsky

Wednesday, May 20, 2015

IIPSC: the Institute for Innovation in Public School Choice

Over at the Dell Foundation (which funds a lot of work on public school choice), they have a Q&A on school choice and enrollment: Neil Dorosin and Gaby Fighetti from The Institute for Innovation in Public School Choice

"The Institute for Innovation in Public School Choice (IIPSC) is a nonprofit organization with a mission to support groups of people in cities in designing and implementing school choice and enrollment processes. They work with consortiums of people in cities to bring them through a process they call market design: creating a group of policies and operations that, when taken together as a whole, govern the way kids apply to and are accepted to schools.
IIPSC is hosting a conference on May 20, 2015 where education leaders from all over theIIPSC_QSO_051915_Blog_callout2 country will gather to immerse themselves in unified enrollment theory and practice. Practitioners from cities that have already implemented or are implementing unified enrollment – Cleveland, Chicago, Denver, Detroit, Indianapolis, New Orleans, New York City, Newark, Oakland, and Washington DC – will be on hand to share their knowledge and experiences. The goal is for all participants to emerge from the conference with a concrete set of knowledge and tools to use in advancing this critical work in their own cities.
Neil Dorosin is the Executive Director and Gaby Fighetti is the Deputy Executive Director of IIPSC. Read more about their work below.
How has IIPSC effectively launched this current reform movement with unified enrollment?
Neil: IIPSC principals first worked together in New York City in the very early Joel Klein years, and in this environment there were almost no charter schools. This illustrates that the ideas within unified enrollment are not specific to any particular type of school- charter schools, district schools, non-public schools, etc. They are ideas that allow administrators to serve families better. To bring efficiency, equity, and transparency to enrollment and choice systems.
When we began working with Denver we realized that what we were doing requires district and charter sectors to work together in a whole new way, and these changes are fundamental to the way cities manage school choice and then hopefully implement portfolio reform strategy. We are committed to political neutrality and always make sure that people in cities know that our work is meant to advance healthy choice processes, not to advance any political position. We love the fact that people in cities all over the country now see the ideas and guiding principles of unified enrollment systems as things that they believe in and want to advance in their cities.
Tell us about the team who helped design the unified enrollment system.
NeilAl Roth shared the Nobel Prize in economics for applying matching theory science to solve real world problems. Most famous examples include the Medical Residency match (matching residents and hospitals), kidney donor exchange programs (identifying compatible pairs of donors and recipients from VERY long waitlists, and saving many lives), and for unified enrollment work.Parag Pathak was his student, and is now a full professor at MIT. Atila Abdulkadiroglu co-wrote the seminal paper on the market design approach to school choice in 2003 and joined Al and Parag in the first schools project – in New York City in 2003. Al, Parag and Atila are all now members of our advisory board and active participants in our projects with cities.
It turns out that matching science can be adapted to solve these and other problems, and to make people’s live better in real and meaningful ways. We are motivated by this every day."

Tuesday, May 19, 2015

Everything for Sale? The Ethics and Economics of Compensation for Body Parts (Video of the panel discussion)

Here's the video of the panel discussion I participated in at Johns Hopkins on May 7, Everything for Sale? The Ethics and Economics of Compensation for Body Parts: the panelists were James Childress, Michele Goodwin, Alvin Roth and Debra Satz

The video, including introductions before and questions after, is an hour and 20 minutes. The introduction by Mario Macis starts around minute 6:40, and includes audience voting on questions of whether they would be in favor of regulated markets for kidneys, for hearts, for blood, for human eggs and sperm, and for breast milk. The panel discussion, moderated by Jeff Kahn, starts at minute 14, with each of the panelists, in alphabetical order, giving an 8 minute opening statement. (Mine begins at 33:20, and ends at 41:41, pretty close to the 8 minute guideline:) .)

Monday, May 18, 2015

School Choice: video of an interview I did in Israel

Here's an interview I did while in Israel in April, mostly about school choice (but also about some of my personal history, game theory, etc.) It starts at minute 4:00 of this news broadcast, and goes until minute 12:45...

Sunday, May 17, 2015

Public schools and private philanthropy

Public school budgets are always stretched to their limits, and one of the ways those limits are sometimes surmounted is with an infusion of private funds, from big foundations with an interest in education, and also, apparently, from wealthy individuals. The NY Times has a story on how this part of school financing for New York City schools flourished more under the former mayor than it appears to be under the current one.
Public Schools Fund, Under de Blasio, Is Struggling to Lure Wealthy Donors

"The Fund for Public Schools, the nonprofit organization that former Mayor Michael R. Bloomberg and his schools chancellors built into a fund-raising juggernaut, has struggled to attract donations under Mayor Bill de Blasio.
The fund, which raised an average of $29 million a year over the last decade, has raised just $18 million this fiscal year, which ends June 30, fund officials said. About half of that comes from two large multiyear grants that began under the Bloomberg administration."