Thursday, October 30, 2014

Wednesday, October 29, 2014

Traditional auction houses move online

Competition, like similarity, isn't as symmetric as we think. Where once eBay competed with established auctioneers like Christies and Sotheby's, now they are playing catchup in the market that eBay pioneered.

Carol Vogel in the NY Times has the story: Gone, in an Instant Auction

"Right now it’s possible to click on and bid on a Warhol drawing, a Helmut Newton photograph and an ostrich Hermès Birkin bag. Often there is a selection of rare wines to be purchased there, too.
And last year, the auction house introduced a buy-it-now feature echoing eBay that offers a head-spinning variety of watches that can be snapped up instantly. “The main objective here is the acquisition of new clients,” said Steven P. Murphy, Christie’s chief executive. “We’re building our online business the old-fashioned way, brick by brick.”
So far the auction house says it has invested $50 million in hiring experts and building its own infrastructure. It dipped its toes in online-only auctions in 2011 with a sale of Elizabeth Taylor’s clothes and jewelry. That effort ramped up considerably last year when Christie’s held 51 online-only sales. Officials there said that number was increasing by 50 percent this year.
Both Christie’s and its rival Sotheby’s introduced online bidding during their live auctions about four years ago. Their success, coupled with the realization that a new population of online shoppers is waiting to be tapped around the world, is what is driving their focus on online-only sales.
While Christie’s is promoting its homegrown e-commerce business, Sotheby’s is taking a different route. In July it announced a partnership with eBay. In the next few months Sotheby’s plans to broadcast most of its live auctions on a new area of eBay’s website. And over time Sotheby’s and eBay will add more options for shoppers, including online-only sales. Sotheby’s hopes to lure eBay’s nearly 150 million customers into being as comfortable buying a 19th-century dining room table or Damien Hirst print as they are a new suitcase or a pair of sneakers.
“Both auction houses are racing to catch up with luxury retailing that has been a huge success online,” said Josh Baer, an art adviser who publishes the Baerfaxt, an industry newsletter, and who was hired by eBay last year to help shape its art programs. “It is now clear to everyone in the art business that it is no longer if online sales of art can happen, but who executes them best.”

Tuesday, October 28, 2014

Personalization of prices, and other things, on the web

Elizabeth Dwoskin has the story in the WSJ:
Why You Can’t Trust You’re Getting the Best Deal Online
A Study Finds Discriminatory Pricing on E-Commerce Sites Is More Widespread Than Thought

"The study, by a team of computer scientists at Northeastern University, tracked searches on 16 popular e-commerce sites. Six of those sites used the pricing techniques; none of the sites alerted consumers to that fact.

"Among the study’s findings: Travel-booking sites Cheaptickets and Orbitz charged some users searching hotel rates an average $12 more per night if they weren’t logged into the sites, and Travelocity charged users of Apple Inc. ’s iOS mobile operating system $15 less for hotels than other users.

"Home Depot Inc. shows mobile-device users products that are roughly $100 more expensive than those offered to desktop-computer users. And Expedia and steer users at random to pricier products, the study said.

“In the real world, there are coupons and loyalty cards, and people are fine with that,” said Christo Wilson, an assistant professor at Northeastern who led the research team. “Here, there’s a transparency problem. The algorithms change regularly, so you don’t know if other people are getting the same results.”

Here's the paper that sparked the newspaper story:
Measuring Price Discrimination and Steering on E-commerce Web Sites
by Aniko Hannak, Gary Soeller, David Lazer, Alan Mislove,  and Christo Wilson (all at Northeastern University).

and here's the website of the group: Personalization Research @ Northeastern

Monday, October 27, 2014

Microeconomics and computer science at Cornell: auctions and privacy

Gates Hall isn't a bad name for a building in which to schedule a seminar in which economics and computers are the subject...

Joint Microeconomics and Computer Science Workshop, Aaron Roth

Mon, 10/27/2014 - 4:00pm

Aaron Roth

University of Pennsylvania

310 Gates Hall


Event Categories: Microeconomic Theory
Private and (Asymptotically) Truthful Combinatorial Auctions

Aaron Roth
Monday, October 27, 2014
4:00pm 310 Gates Hall
Consider the following problem: a large public electricity provider (say, in California) faces a situation where demand for electricity might, without intervention, rise above the utility's ability to generate power. Rather than resorting to rolling brown-outs, however, a forward-thinking ballot initiative has given the utility the ability to shut off the air-conditioners of individual buildings remotely. Using this ability, the utility hopes, they might be able to coordinate shut-offs so that nobody is ever uncomfortable (say, guaranteeing that every apartment's air conditioner runs during some 10 minute interval of every hour in which the apartment is occupied), but so that peak electricity usage never rises above peak power production.
While this combinatorial optimization approach to the problem might be preferable to rolling brown outs, it introduces a privacy concern: the utility will now be making decisions as a function of when customers report they are at home, which can be highly sensitive information. Is there a way to solve this problem so that no coalition of customers j != i can learn about the schedule of customer i? Moreover, can we pair such a solution with a schedule of electricity rates so that no player has more than a vanishing incentive to misreport their demands?

We show that the answer is "yes" to this problem, and to a broad class of welfare maximization problems that can be posed as convex programs. We give a method to compute near optimal solutions to such problems under the formal constraint of ``differential privacy'', while giving Walrasian-equilibrium like item/resource pricings which result in truth-telling as an asymptotically dominant strategy, as the size of the economy grows large (in a mild way). 

Sunday, October 26, 2014

A call for reimbursing the costs of kidney donation

The New Republic carries a passionate appeal by Sigrid Fry-Revere and David Donadio under the headline America's Organ Transplant Law Is Criminally Unfair to Donors

They write

"As a result of the National Organ Transplant Act, more Americans have lost their lives waiting for an organ than died in world wars I and II, Korea, Vietnam, Afghanistan, and Iraq combined. The law bans almost any non-medical payment to living organ donors, whether by the government, health insurance companies, or charities. Recipients themselves can reimburse donors’ travel, lodging, and lost wages, which helpsbut only when the recipients have the means and will to do so.
"The solution is not to create a market in organs, but to help living donors meet the considerable expenses they incur in saving others’ lives. Giving an organ costs an average of $5,000, but as the Journal of the American Society of Nephrology notes, can be as much as $20,000. According to the U.S. Census Bureau, 20 percent of American households have no discretionary funds at all, and only 8 percent can afford to spend $5,000 donating organs without dipping into their savings or going into debt.
"In the coming weeks, the American Society of Transplant Surgeons, the American Renal Society, and the American Society for Transplantation will all release white papers arguing for studies on compensated organ donation. While there is no harm in studying the creation of incentives, the first step should be to get rid of the financial disincentives that currently keep thousands of living donors from being able to donate. One sensible proposal would be creating a debit card-based system not unlike the one the government employs for the victims of natural disasters, enabling government programs, private medical charities, and other people to cover donors’ expenses as they occur."

Writing about the history of the NOTA, they write
"The law resulted 30 years ago from righteous revulsion at a proposal by Dr. Barry Jacobs that the government pay people to come to the U.S. to donate their kidneys. Jacobs wanted to start his own business marketing organs, and figured that the government could spend relatively little compensating these donorsmaybe only $1,000 eachand then send them on their way.
"Initially, Congress had simply been considering a low-profile law implementing a nationwide network to distribute cadaver organs, but when Jacobs suggested his idea in official testimony, it immediately got representatives’ attention. The prospect that the U.S. would ship thousands of impoverished people here from developing nations so that rich Americans could harvest their kidneys read like the plot of a science fiction novel.
"Dr. Paul Terasaki, president of one of the three main American transplant societies, testified before Congress in 1983 that physicians “strongly condemn the recent scheme for commercial purchase of organs from living donors,” and that it is a “completely morally and ethically irresponsible proposal.” Congress reacted by adding a provision that banned all but very specific types of payment in relation to organ donation, and the rest is history."

Saturday, October 25, 2014

Matching German lawyers to their first jobs

There's a lot of interesting market design problems being studied in Germany these days.  Here's a recent working paper from the Department of Economics at Humboldt University in Berlin:

Matching with Waiting Times: The German Entry-Level Labour Market for Lawyers by Philipp D. Dimakopoulos and C.-Philipp Heller

Friday, October 24, 2014

Nominating a repugnant transaction

I use this blog to describe a lot of repugnant transactions, but I try not to pass judgement on them, since the nature of repugnant transactions is that some people want to engage in them and others think they shouldn't, and who am I to judge?

But this recent NY Times story almost tempted me to become judgmental. I think it was this picture that did it.

Here's the story, by Liz Alderman: Chefs Fight for Songbird. The Ortolan: A Tiny Bird as a French Cause Célèbre

"the ortolan, a tiny songbird that gourmands, including former President François Mitterrand, used to covet, consuming the head, bones and body in a single, steaming mouthful, while covering their faces with a white napkin to conceal the act.
Now, Mr. Guérard and three other celebrity chefs who hail from southwest France — Alain DucasseJean Coussau andAlain Dutournier — are trying to engineer a public comeback for the ortolan, an overhunted species that France banished from restaurant menus in 1999. If they get their way, the forbidden food will be legally offered to napkin-wearing diners at restaurants in Landes for one weekend a year 
Maybe there should be a special surcharge for anyone who gets to eat the last ortolan...

Feel free to suggest transactions that strike you as (possibly) repugnant...
(to get your creative juices flowing, here's a photo of a dog to go in Vietnam, sent to me by Bernhard von Stengel..