Beatrice Cherrier Profile picture
Jan 6, 2018 13 tweets 5 min read Twitter logo Read on Twitter
A few tweets on Al Roth's presidential address on "marketplaces, markets and mechanism design #ASSA2018
Mechanism design is what we do as theorists. Market design is what we do when we intervene in real markets to improve them. Practical market design part of economic engineering, which means details matter. Marketplace design ever better term than market design (more applied)
The rule of markets adapt to new technologies. Think about Amazon and Uber. Amazon plucked an existing trade on new technology, but Uber is really a consequence of new technologies creating a new market, not a commodity market.
Uber is not a commodity market but a matching market, where you care who you’re dealing with, so that price don’t do all the work. You can’t choose all you want, you also have to be chosen (labor is also matching market)
Takes as an example of matching markets AEA job market. Can become congested when too many time consuming tasks. Congestion is a consequence of having successfully created a thick market. Solved through building signaling mechanisms
In kidney market, some people don’t wish to participate themselves & even think such marketplaces shouldn’t be allowed to operate at all.

Has EJMR made AEA job market repugnant?
Yes, see CSWEP session:
AEA is addressing this by reforming JOE information
Sometimes markets fail to become thick. On such case is unraveling (when job offers come too early and you have to commit before other offers become available).

That’s the case with clerks, law associates, college athletes, colleges. Private equity even hire 2 years in advance!
Example of medical job market. Creating of centralized clearinghouse resulted in declining rates of participation among married couples. Roth famously solved the problem through applying Gale-Shapley deferred acceptance algorithm which produces stable matching, fast acceptance
Still not working well for couples (you can’t be happier than your spouse). Created a mechanism that allow them to consume *pairs* of jobs.
But thicker market raised new problems: meds began to apply to lots of places, creating interview congestion. So he introduced signaling
Roth talks about repugnant transactions and how to organize a kidney market. Moneyless kidney exchange seemed *fair* (no definition of fairness given here). Became the basis of kidney exchange chains.
Rising transplants, good (no definition of *good* either)
Roth now wants to make kidney market thicker by making it more global (inviting foreigners to participate in US chains. Though this raises issues of global health insurance, they could be invited for free).

But this create bigger repugnance issues, therefore bigger resistance
Roth seems frustrated by such resistance. Same with drug markets or immigrant settlements, he argues.

In the end, what encourages or inhibit centralized markets? Computer science for the former, he suggests.

(me, fumbling) HOW ABOUT LIGHT ETHICAL FOUNDATIONS as inhibitor?
Roth's presidential address was cool, but also has important ethical stakes. Yet non were mentioned.

Like others, I'm frustrated by the ethical shyness of market designers.

See for instance the debate b/w Roth and Sandel on repugnance:…

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More from @Undercoverhist

Oct 1, 2018
1/Long tweetstorm about the bumpy road toward developing macroeconometric models at the Fed in the 1960s, and their difficult integration into the monetary policy decision-making process

Based on paper w/ @jcaacostamacia here…

Tweets reflect my views
2/Our goal was to supplement those accounts of the “scientization” of central banking which are backed by quantitative analysis showing rise of PhD econ in decision (see @foxjust… ) and advising positions (see @claveau_f & Dion… )
3/ our story challenges idea of a late swift takeover of the Fed by PhD econs. It shows that which kind of analysis Fed econs developed mattered more than their training & that their traction over monetary decisions relied on which combination of science & art the Board pursued
Read 32 tweets
Aug 31, 2018
1/ Reading 1970s state-of-economics debates in 2018 is a bit like looking oneself in a dusty mirror.

A demonstration with AEA presidential addresses:
2/ Attacks:

"Economists ignore normative aspects"
(Boulding, “Economics as a moral science,” 1968 Presidential Address )
3/ "Economists’ sophisticated math ignore the real-world"

(Leontief, “theoretical assumptions and non-observed facts,” 1970 presidential address…)
Read 15 tweets
Aug 10, 2018
Hey @Forbes , do you have a color pic of your December 17, 1984 cover ?
(featuring Ricardo, Samuelson, Smith, Tobin, Friedman, Modigliani, Keynes, Schumpeter)
The content is just as cool as the cover: "Given the low self-esteem in the econ profession, any theory is going to get a hearing." Others sign that 'the young have no sense"

Chief Ratexian Lucas: "It hurts to see people come in w/ new tools when you thought you knew everything"
Read 5 tweets
Jul 2, 2018
Some reflections on a paper on "Samuelson, discrimination and gender bias" I just wrote w/ Roger Backhouse…

It wasn’t a planned project, but the kind of data hoarding you know is going to itch forever if you don’t keep scratching until you have a paper
At the beginning there was his famous deprecatory remark on “women and soapbox operators longer on intuition than brain” in his 1948 textbook, which found its way into JEC hearings in 1973 (see full story in this thread )
Samuelson later profusely apologized (see ), but in the process of deleting it from later editions, he made other inflammatory comments on female economic students (and apologized again )
Read 19 tweets
Jun 3, 2018
Names of economists 60 and above Samuelson suggested to the Nobel Prize, sorry Bank of Sweden prize in honor of Alfred Nobel committee in 1968
Then Samuelson goes on to write a road map of future Econ Nobels (in 1968, mentions Sen and Stigler elsewhere in the letter, though those who didn't got the prize are equally interesting)
Ooops, then he did it again. Many times. here, laying out the road map for efficient market hypothesis prize and game theory (note the head scratch around Nash. There was a Nash-Harsanyi-Selten prize in 94, then Vickrey in 96, then Aumann-Schelling in 2005)
Read 5 tweets
Apr 19, 2018
1/ In 1938 as in 2018, trade wars, tariffs and mercantilism were hot topics. That year, Bryn Mawr economist Karl Anderson published a blistering critique of Australian econs’ attempts to establish a tariff on manufactured good in the QJE

(note: this is not a thread on trade)
2/ Anderson argued that free trade would maximize the real share of each productive factor, thus Australian national income. The underlying discussion of elasticities & returns of scales was, as often in those years, literary
3/ Yet in a QJE rejoinder published the next year, a young Harvard graduate student offered a numerical example in which tariffs raised consumption of manufactured & primary goods, raising labor income. Anderson's demonstration was a non-sequitur, it concluded
Read 11 tweets

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