Law & Econ Prof Blog

Market Design

I highly recommend Al Roth's new research paper, "What Have We Learned from Market Design?"  The piece is an NBER Working Paper; so, you'll only be able to access it for free if you have an institutional account.  Otherwise, it will cost $5. 

The article begins with the general lessons that we have learned from designing markets and then considers the resident matching program, kidney exchange, and the market for new economists as examples.  The five general lessons of market design are these: "To work well, marketplaces need to: (1) provide thickness -- that is, they need to attract a sufficient proportion of potential market participants to come together ready to transact with one another; (2) overcome the congestion that thickness can bring, by providing enough time, or by making transactions fast enough, so that market participants can consider enough alternative possible transactions to arrive at satisfactory ones; (3) make it safe to participate in the market as simply as possible (a) as opposed to transacting outside of the marketplace, or (b) as opposed to engaging in strategic behavior that reduces overall welfare; and these lessons: (4) some kinds of transactions are repugnant, and this can be an important constraint on market design; and (5) experiments can play a role, in diagnosing and understanding market failures and successes, in testing new designs, and in communicating results to policymakers." 

Happy Thanksgiving! 
TSU

Death Penalty and Deterrence

Tomorrow's (November 18) New York Times has an excellent article by Adam Liptak, summarizing the recent scholarly literature on the deterrent effect of capital punishment.  Liptak very helpfully includes links to the most recent literature on the topic.  See here. 

TSU

Criminal Profiling

In the November 12, 2007, New Yorker magazine, Malcolm Gladwell has a marvelous article -- "Dangerous Minds: Criminal Profiling Made Easy," available here.  The article is a devastating critique of criminal profilers.  Here's an example of the sort of guidance that FBI profilers gave to detectives in Wichita, Kansas, who were looking for the serial killer who called himself BTK (for "Bind, Torture, Kill"): 

    "Look for an American male with a possible connection to the military.  His I.Q. will be above 105.  He will like to masturbate, and will be aloof and selfish in bed.  He will drive a decent car.  He will be a 'now' person.  He won't be comfortable with women.  But he may have women friends. [!] He will be a lone wolf.  But he will be able to function in social settings.  He won't be unmemorable.  But he will be unknowable.  He will be either never married, divorced, or married, and if he was or is married, his wife will be younger or older.  [!]  He may or may not [!] live in a rental, and might be lower class, upper lower class, lower middle class, or middle class.  [!]  And he will be crazy like a fox, as opposed to being mental." 

    As Gladwell notes, even assuming that you could make sense of that garbage, it was preposterously off the mark: "BTK was a pillar of his community, the president of his church, and the married father of two."

TSU

Organ Sales, Again

Today's Wall Street Journal has a very, very informative article about kidney organ shortages and the possibility of a regulated market to relieve the shortage.  See here.  As someone long in favor of a regulated market -- or, at least, in favor of giving the market a test -- I'm thrilled by the hint in the article that opposition to market trials seems to be waning.  Be sure to read the sidebar exchange between Julio Elias (for) and Al Roth (against). 

TSU