This week saw the start of my second attempt at a graduate course on market design. Although a reading course (in the sense that students present papers) I began with a survey of what I think are the main ideas one should be familiar with. With over 20 people in the room, I was sweating bullets, having expected at most half that. I will post the substance of the first lecture at a later date. In the next session I will use electricity markets as a vehicle to show how one should think about the questions to be answered as well as the kinds of issues one faces when designing a market. 

The list of papers to be covered appears below, along with the instructions I gave the students on presentations.


Presentation Rules: I expect every presentation to accomplish the following (in addition to the usual of having well prepared slides, understanding and answering questions etc.):

  1. Provide background for the issue to be discussed.
  2. An unambiguous statement of the issue and an explanation for why its resolution is not obvious.
  3. A description of the resolution proposed by the author(s) of the paper. This is where one discusses the model in the paper.
  4. An exposition of the analysis of the model. A good exposition will focus on the main point and perhaps even identify a telling example that conveys it as well as the full model does. The point of such an exposition is to show the role of each assumption in arriving at the authors main conclusion.
  5. A critique. Did authors address the right question? Is the way they chose to frame the issue sensible? Is the model persuasive? If not, why not? Simiply saying its not general enough is insufficient. No model if it is to be tractable can be fully general.
  6. Suggestions for future research.


Topics & Papers

1. IPOs

Jaganathan and Sherman: Why do IPO Auctions Fail

Ritter: Equilibrium in the IPO market

Background Reading (to be read by all)
Ljungqvist: IPO Underpricing: A Survey
Ritter and Welch: A review of IPO activity, pricing and allocations


2. Health Care & Insurance Markets

Cochran, J: Time Consistent Health Insurance, JPE 1995.
Cochran, J. : After the ACA: Freeing the market for health care
Fang & Gazzara: Dynamic Inefficiencies in an Employment-Based Health Insurance System: Theory and Evidence 
Handel, Hendel and Whinston: Equilibria in Health Exchanges: Adverse Selection vs. Reclassification Risk 
Levine, Kremer and Albright: Making Markets for Vaccines 
Kremer: Creating Markets for New Vaccines Part 1: rationale
Kremer: Creating Markets for New Vaccines Part 2: design issues 

Background Reading (to be read by all)
Rothschild, M. & J. Stiglitz: Equilibrium in Competitive Insurance Markets, QJE 1976.
Fang, H: Insurance Markets in China

3. Market for Cybersecurity Insurance

Kesan, Majuca & Yurcik: Cyberinsurance as a market based solution to the problem of cybersecurity


4. Affirmative Action

Hickman: Effort, Race Gaps and Affirmative Action: A Game Theoretic Analsyis of College Admissions
Chung: Affirmative Action as an Implementation Problem
Fryer and Loury: Valuing Identity: The simple economics of Affirmative action policies

Background Reading (to be read by all)
Fang and Moro: Theories of Statistical Discrimination and Affirmative Action: a survey


5. Assigning Counsel

Friedman & Schulhofer: Rethinking Indigent Defense: Promoting Effective Representation Through Consumer Sovereignty and Freedom of Choice for All Criminal Defendants


6. The Role of Politics

Acemoglu: Why not a political Coase theorem?
Acemoglu: Modeling Inefficient Institutions