Pairwise Kidney Exchange

The theoretical literature on exchange of indivisible goods finds natural application in organizing the exchange of live donor kidneys for transplant. However, in kidney exchange, there are constraints on the size of feasible exchanges. Initially, kidney exchanges are likely to be pairwise exchanges, between just two patient-donor pairs, as these are logistically simpler than larger exchanges. Furthermore, the experience of many American surgeons suggests to them that preferences over kidneys are approximately 0-1, i.e. that patients and surgeons should be largely indifferent among healthy donors whose kidneys are compatible with the patient. This is because, in the United States, transplants of compatible live kidneys have about equal graft survival probabilities, regardless of the closeness of tissue types between patient and donor. We show that, although the pairwise constraint eliminates some potential exchanges, there is a wide class of constrained-efficient mechanisms that are strategy-proof when patient-donor pairs and surgeons have 0-1 preferences. This class of mechanisms includes deterministic mechanisms that would accomodate the kinds of priority setting that organ banks currently use to allocate cadaver organs, as well as stochastic mechanisms that allow distributive justice issues to be

Effects of alternative elicitation formats in discrete choice experiments

An elicitation format prevalently applied in DCE is to offer each respondent a sequence of choice tasks containing more than two choice options. However, empirical evidence indicates that repeated choice tasks influence choice behavior through institutional learning, fatigue, value learning, and strategic response. The study reported in this paper employs a split sample approach based on field surveys using a single binary elicitation format with a majority vote implementation as the baseline to expand the research on effects of sequential binary DCE formats. We provide evidence for effects caused by institutional learning and either strategic behavior or value learning after respondents answered repeated choice questions. However, we did not find any indications for strategic behavior caused by awareness of having multiple choices. The choice between a sequential and a single elicitation format may thus imply a trade-off between decreased choice accuracy and potentially increased strategic behavior due to an incentive incompatible mechanism. Further research is needed to explore strategic behavior induced by incentive incompatible elicitation formats using alternative approaches that are not compromised by a confounded baseline, that facilitate the differentiation between value learning and strategic behavior, and that allow the use of less restrictive model specifications. Such research should also investigate the effects of varying incentives induced by the order in which choice questions are presented to respondents.discrete choice experiments, split sample approach, elicitation format, incentive compatibility, strategic behavior, learning effects, panel mixed logit models, Environmental Economics and Policy,

Effects of alternative elicitation formats in discrete choice experiments

An elicitation format prevalently applied in discrete choice experiments (DCEs) offers each respondent a sequence of choice tasks. Each choice task contains more than two choice options. Empirical evidence shows, however, that repeated choice tasks influence choice behaviour through institutional learning, fatigue, value learning and strategic response. The study reported in this paper uses a split sample approach. This approach was based on field surveys using a single binary elicitation format. To expand the research on effects of sequential binary DCE formats, a majority vote baseline was used. We present evidence for effects caused by institutional learning, and by either strategic behaviour or value learning, after respondents answered repeated choice questions. However, we did not find any indications for strategic behaviour in respondents caused by their awareness of having multiple choices. The decision to use a sequential or a single elicitation format may therefore imply a trade-off between decreased choice accuracy and potentially increased strategic behaviour in respondents. This trade-off is due to an incentive incompatible mechanism. Further research is needed to explore strategic behaviour induced by incentive incompatible elicitation formats, using alternative approaches that are not compromised by a confounded baseline, that facilitate the differentiation between value learning and strategic behaviour, and that allow the use of less restrictive model specifications. Such research should also investigate the effects of varying incentives induced by the order in which choice questions are presented to respondents.discrete choice experiments, split sample approach, elicitation format, incentive compatibility, strategic behaviour, learning effects, panel mixed logit models, Environmental Economics and Policy, Research Methods/ Statistical Methods,

Pairwise Kidney Exchange

In connection with an earlier paper on the exchange of live donor kidneys (Roth, S”nmez, and šnver 2004) the authors entered into discussions with New England transplant surgeons and their colleagues in the transplant community, aimed at implementing a Kidney Exchange program. In the course of those discussions it became clear that a likely first step will be to implement pairwise exchanges, between just two patient-donor pairs, as these are logistically simpler than exchanges involving more than two pairs. Furthermore, the experience of these surgeons suggests to them that patient and surgeon preferences over kidneys should be 0-1, i.e. that patients and surgeons should be indifferent among kidneys from healthy donors whose kidneys are compatible with the patient. This is because, in the United States, transplants of compatible live kidneys have about equal graft survival `robabilities, regardless of the closeness of tissue types between patient and dOnor (unless there is a rare perfect match). In the present paper we show that, although thd pairwise constraint eliminates some potential exchanges, there is a wide class of constrained-efficient mechanisms 4hat are strategy-proof when patient-donor pairs and surgeons have 0-1 preferences. This class of meahanisms includes deterministic mechanisms that would accomodate the kinds of priority setting that organ banks currently use for the allocation of cadaver organs, as well as stochastic mechanisms that allow considerations of distributive justice to be addressed.

Social Choice and Just Institutions: New Perspectives

It has become accepted that social choice is impossible in absence of interpersonal comparisons of well-being. This view is challenged here. Arrow obtained an impossibility theorem only by making unreasonable demands on social choice functions. With reasonable requirements, one can get very attractive possibilities and derive social preferences on the basis of non-comparable individual preferences. This new approach makes it possible to design optimal second-best institutions inspired by principles of fairness, while traditionally the analysis of optimal second-best institutions was thought to require interpersonal comparisons of well-being. In particular, this new approach turns out to be especially suitable for the application of recent philosophical theories of justice formulated in terms of fairness, such as equality of resources.social welfare, social choice, fairness, egalitarian-equivalence

Welfare Bounds in a Growing Population

We study the allocation of collectively owned indivisible goods when monetary transfers are possible. We restrict our attention to incentive compatible mechanisms which allocate the goods efficiently. Among these mechanisms, we characterize those that respect welfare lower bounds. The main characterization involves the identical-preferences lower-bound: each agent should be at least as well off as in an hypothetical economy where all agents have the same preference as hers, no agent envies another, and the budget is balanced. This welfare lower-bound grants agents equal rights/responsibilities over the jointly owned resources but insures agents against the heterogeneity in preferences. We also study the implications of imposing variable population axioms together with welfare bounds.collective ownership, allocation of indivisible goods and money, NIMBY problems, imposition of tasks, the Groves mechanisms, the identical-preferences lower-bound, individual rationality, the stand-alone lower-bound, k-fairness, population monotonicity

Feasibility Constraints and Protective Behavior in Efficient Kidney Exchange

We propose a model of Kidney-Exchange that incorporates the main European institutional features. We assume that patients do not consider all compatible kidneys homogeneous and patients are endowed with reservation values over the minimal quality of the kidney they may receive. Under feasibility constraints, patients' truthful revelation of reservation values is incompatible with constrained efficiency. In the light of this result, we introduce an alternative behavioral assumption on patients' incentives. Patients choose their revelation strategies as to “protect” themselves from bad outcomes and use a lexicographic refinement of maximin strategies. In this environment, if exchanges are pairwise, then priority rules or rules that maximize a fixed ordering provide incentives for the patients to report their true reservation values. The positive result vanishes if larger exchanges are admitted.Kidney, Matching, Protective Behavior

Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson: Mechanism Design Theory

Scientific Background, The Nobel Prize in Economic Sciences 2007. Economic transactions take place in markets, within firms and under a host of other institutional arrangements. Some markets are free of government intervention while others are regulated. Within firms, some transactions are guided by market prices, some are negotiated, and yet others are dictated by management. Mechanism design theory provides a coherent framework for analyzing this great variety of institutions, or "allocation mechanisms", with a focus on the problems associated with incentives and private information.Mechanism Design; Asymmetric Information

Environmental management problems, future generations and social decisions

The decisions of many individuals and social groups, taking according to well-defined objectives, are causing serious social and environmental problems, in spite of following the dictates of economic rationality. There are many examples of serious problems for which there are not yet appropriate solutions, such as management of scarce natural resources including aquifer water or the distribution of space among incompatible uses. In order to solve these problems, the paper first characterizes the resources and goods involved from an economic perspective. Then, for each case, the paper notes that there is a serious divergence between individual and collective interests and, where possible, it designs the procedure for solving the conflict of interests. With this procedure, the real opportunities for the application of economic theory are shown, and especially the theory on collective goods and externalities. The limitations of conventional economic analysis are shown and the opportunity to correct the shortfalls is examined. Many environmental problems, such as climate change, have an impact on different generations that do not participate in present decisions. The paper shows that for these cases, the solutions suggested by economic theory are not valid. Furthermore, conventional methods of economic valuation (which usually help decision-makers) are unable to account for the existence of different generations and tend to obviate long-term impacts. The paper analyzes how economic valuation methods could account for the costs and benefits enjoyed by present and future generations. The paper studies an appropriate consideration of preferences for future consumption and the incorporation of sustainability as a requirement in social decisions, which implies not only more efficiency but also a fairer distribution between generations than the one implied by conventional economic analysis.

Kidney Exchange

Most transplanted kidneys are from cadavers, but there are also substantial numbers of transplants from live donors. Recently, there have started to be kidney exchanges involving two donor-patient pairs such that each donor cannot give a kidney to the intended recipient because of immunological incompatibility, but each patient can receive a kidney from the other donor. Exchanges are also made in which a donor-patient pair makes a donation to someone on the queue for a cadaver kidney, in return for the patient in the pair receiving the highest priority for a compatible cadaver kidney when one becomes available. We explore how such exchanges can be arranged efficiently and incentive compatibly. The problem resembles some of the housing' problems studied in the mechanism design literature for indivisible goods, with the novel feature that while live donor kidneys can be assigned simultaneously, the cadaver kidneys must be transplanted immediately upon becoming available. In addition to studying the theoretical properties of the design we propose for a kidney exchange, we present simulation results suggesting that the welfare gains would be substantial, both in increased number of feasible live donation transplants, and in improved match quality of transplanted kidneys.