Results for “prizes”
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Letters of Marque and Reprisal

Brooking, Charles; Commodore Walker’s Action: The Privateer ‘Boscawen’ Engaging a Fleet of French Ships, 23 May 1745; National Maritime Museum; http://www.artuk.org/artworks/commodore-walkers-action-the-privateer-boscawen-engaging-a-fleet-of-french-ships-23-may-1745-173089

Representative Lance Gooden (R, TX) introduced a bill to authorize the President of the United States to issue letters of marque and reprisal against certain Russians.

Are You More Strategic than a Fifth Grader?

Isabelle Brocas and Juan Carrillo have a new paper in the JPE testing when children develop strategic (k-level) reasoning. A clever game outlined below illustrates the basic idea. Players 1,2 and 3 are asked to make (simultaneous) choices to earn prizes (money for the adults and older kids, points for toys for the younger kids). The sophisticated, rational choice becomes successively more difficult as we from from player 3 to player 1. Player 3 is simply asked to match a shape. In the case shown, for example, player 3 earns the most by choosing the red square labelled C since it matches the shape of the blue square labelled A. Player 2 earns the most by choosing the color chosen by Player 3. Of course, Player 2 doesn’t know what color Player 3 will choose and so has to reason about Player 3’s actions. What color do you choose? Player 1 earns the most by choosing the same letter as Player 2 but now must reason about Player 2 which involves reasoning about how Player 2 will reason about Player 3. What letter do you choose?What do the authors find? First, for both adults and kids either they get it or they don’t. The ones who don’t make the right choice as Player 3 but then randomly choose when playing either Player 2 or Player 1. The ones who get it, play correctly at all three levels. In other words, almost everyone who reasons correct as Player 2 (1-level reasoning) also reasons correctly as Player 1 (2-level reasoning).

Second, there is a marked increase in the ability to perform k-level thinking between ages 8 and 12 but after age 12 (fifth grade) there is shockingly little growth. Together the first and second points suggest that k-level thinking is more of a quantum leap than an evolution in reasoning ability.

Third, most adults reason correctly in this simple game but a significant fraction do not. As the authors put it “some very young players display an innate ability to play always at equilibrium while some young adults are unable to perform two steps of dominance.”

Demographic factors are mostly as expected, children interested in STEM fields perform better (n.b. this implies that contrary to some opinions the STEM set are better at social interaction), kids from better socio-economic backgrounds perform better and slightly unexpected females perform better than males, perhaps because they are more disciplined.

As the authors conclude:

Adolescents are particularly exposed to situations in which strategic sophistication is crucial to avoid wrong decisions. Examples include engaging in risky activities, such as accepting drugs from peers or engaging in unprotected sex. Also, with the development of the internet, naive users are often preyed upon, asked to provide personal information, or tricked into making harmful decisions. Information deliberately intended to deceive young minds also circulates through social media. Making correct decisions in such environments requires understanding the intentions of others and anticipating the consequences of following their advice or opinions. More generally, children and adolescents are gradually discovering the dangers hiding behind social interactions and need to come equipped to detect them, assess them, and navigate around them. We conjecture that failures in these abilities are closely related to underdeveloped logical abilities, and we predict that the level of sophistication of an individual detected through a simple task matches their behavior in social settings.

The vaccine lottery is a worthwhile investment

Conditional cash lotteries (CCLs) provide people with opportunities to win monetary prizes only if they make specific behavioral changes. We conduct a case study of Ohio’s Vax-A-Million initiative, the first CCL targeting COVID-19 vaccinations. Forming a synthetic control from other states, we find that Ohio’s incentive scheme increases the vaccinated share of state population by 1.5 percent (0.7 pp), costing sixty-eight dollars per person persuaded to vaccinate. We show this causes significant reductions in COVID-19, preventing at least one infection for every six vaccinations that the lottery had successfully encouraged. These findings are promising for similar CCL public health initiatives.

That is from a new paper by Andrew Barber and Jeremy West.

Shower Thoughts on IP

Tim Harford has an excellent column on IP:

There is a broad logic to intellectual property, then. But the specifics can be questioned. For example, just how temporary is the monopoly? F Scott Fitzgerald published The Great Gatsby in 1925 and died in 1940. The work only entered the public domain in 2021, after several posthumous copyright extensions, none of which can have been much of an incentive for him to write more.

Then there is the question of what deserves protection. At the height of the dotcom boom, an economics professor, Alex Tabarrok, was taking a shower when he dreamed up the idea of using cell phones to scan barcodes in a store, compare prices and order the product online. Alas, someone else had beaten him to the patent office by mere months. The idea, once unthinkable, was by 1999 rather obvious.

But why should society award 20 years of monopoly rights for the kind of idea that an amateur could dream up in the shower? Tabarrok suggests — rightly — that a 20-year patent should be awarded only if the inventor can prove the idea was expensive to develop. Without that, a five-year patent should be sufficient reward — and, more importantly, sufficient incentive.

I agree entirely with Harford’s concluding comments:

…If we are to produce the extra doses we need, we should focus on lifting every constraint. Perhaps patents fall into that category, but it seems more likely that they are a distraction from the expense of subsidising new factories and more doses for low-income countries. We should spend that money willingly, both for moral and for self-interested reasons.

As for intellectual property, the system needs to change in a hundred ways, some of which require the weakening of intellectual property and the strengthening of other incentives such as prizes and targeted subsidies. When we think through those changes, we should spend less time looking for victims and villains in the creative sphere — and more time thinking about where new ideas come from, and how they can be nurtured.

Read my piece on patent reform. Astute readers will note that there’s no contradiction between thinking that the patent system is in general too strong and that pharmaceutical patents increase innovation and that patents are not a major bottleneck to COVID vaccines. It’s all about evaluating tradeoffs in different scenarios.

Patents are Not the Problem!

For the last year and a half I have been shouting from the rooftops, “invest in capacity, build more factories, shore up the supply lines, spend billions to save trillions.” Fortunately, some boffins in the Biden administration have found a better way, “the US supports the waiver of IP protections on COVID-19 vaccines to help end the pandemic.”
Waive IP protections. So simple. Why didn’t I think of that???

Patents are not the problem. All of the vaccine manufacturers are trying to increase supply as quickly as possible. Billions of doses are being produced–more than ever before in the history of the world. Licenses are widely available. AstraZeneca have licensed their vaccine for production with manufactures around the world, including in India, Brazil, Mexico, Argentina, China and South Africa. J&J’s vaccine has been licensed for production by multiple firms in the United States as well as with firms in Spain, South Africa and France. Sputnik has been licensed for production by firms in India, China, South Korea, Brazil and pending EMA approval with firms in Germany and France. Sinopharm has been licensed in the UAE, Egypt and Bangladesh. Novavax has licensed its vaccine for production in South Korea, India, and Japan and it is desperate to find other licensees but technology transfer isn’t easy and there are limited supplies of raw materials:

Virtually overnight, [Novavax] set up a network of outside manufacturers more ambitious than one outside executive said he’s ever seen, but they struggled at times to transfer their technology there amid pandemic travel restrictions. They were kicked out of one factory by the same government that’s bankrolled their effort. Competing with larger competitors, they’ve found themselves short on raw materials as diverse as Chilean tree bark and bioreactor bags. They signed a deal with India’s Serum Institute to produce many of their COVAX doses but now face the realistic chance that even when Serum gets to full capacity — and they are behind — India’s government, dealing with the world’s worst active outbreak, won’t let the shots leave the country.

Plastic bags are a bigger bottleneck than patents. The US embargo on vaccine supplies to India was precisely that the Biden administration used the DPA to prioritize things like bioreactor bags and filters to US suppliers and that meant that India’s Serum Institute was having trouble getting its production lines ready for Novavax. CureVac, another potential mRNA vaccine, is also finding it difficult to find supplies due to US restrictions (which means supplies are short everywhere). As Derek Lowe said:

Abolishing patents will not provide more shaker bags or more Chilean tree bark, nor provide more of the key filtration materials needed for production. These processes have a lot of potential choke points and rate-limiting steps in them, and there is no wand that will wave that complexity away.

Technology transfer has been difficult for AstraZeneca–which is one reason they have had production difficulties–and their vaccine uses relatively well understood technology. The mRNA technology is new and has never before been used to produce at scale. Pfizer and Moderna had to build factories and distribution systems from scratch. There are no mRNA factories idling on the sidelines. If there were, Moderna or Pfizer would be happy to license since they are producing in their own factories 24 hours a day, seven days a week (monopolies restrict supply, remember?). Why do you think China hasn’t yet produced an mRNA vaccine? Hint: it isn’t fear about violating IP. Moreover, even Moderna and Pfizer don’t yet fully understand their production technology, they are learning by doing every single day. Moderna has said that they won’t enforce their patents during the pandemic but no one has stepped up to produce because no one else can.

The US trade representative’s announcement is virtue signaling to the anti-market left and will do little to nothing to increase supply.

What can we do to increase supply? Sorry, there is no quick and cheap solution. We must spend. Trump’s Operation Warp Speed spent on the order of $15 billion. If we want more, we need to spend more and on similar scale. The Biden administration paid $269 million to Merck to retool its factories to make the J&J vaccine. That was a good start. We could also offer Pfizer and Moderna say $100 a dose to produce in excess of their current production and maybe with those resources there is more they could do. South Africa and India and every other country in the world should offer the same (India hasn’t even approved the Pfizer vaccine and they are complaining about IP!??) We should ease up on the DPA and invest more in the supply chain–let’s get CureVac and the Serum Institute what they need. We should work like hell to find a substitute for Chilean tree bark. See my piece in Science co-authored with Michael Kremer et. al. for more ideas. (Note also that these ideas are better at dealing with current supply constraints and they also increase the incentive to produce future vaccines, unlike shortsighted patent abrogation.)

Bottom line is that producing more takes real resources not waving magic patent wands.

You may have gathered that I am angry. I am indeed angry that the people in power think they can solve real problems on the cheap and at someone else’s expense. This is not serious. I am also angry that they are sending the wrong message about business, profits and capitalism. So let me end on positive note. Like the Apollo program and Dunkirk, the creation of the mRNA vaccines by Pfizer and Moderna should be lauded with Nobel prizes and major movies. Churchill called the rescue at Dunkirk a “miracle of deliverance,” well the miracle of Moderna will rescue many more. Not only was a vaccine designed in under a year, an entirely new production process was set up to produce billions of doses to rescue the world. The creation of the mRNA vaccines was a triumph of science, logistics, and management and it was done at a speed that I had thought possible only for past generations.

I am grateful that greatness is still within our civilization’s grasp.

Addendum: Lest I be accused of being reflexively pro-patent, do recall the Tabarrok curve.

Tuesday assorted links

1. MIE: Used AmEx card of Michael Jordan sells for 3k.

2. Criticisms of Galef.

3. AEA best paper prizes.

4. MIE: putting product placement in old classic movies.

5. Promising Young Woman is indeed a very good movie, at times hard to watch, and most of the reviews are either inarticulate or uncomprehending because few are willing to grasp and explain (part of) what makes it so interesting.

Can open access scientific publishing work?

That is the top of my latest Bloomberg column, another link here, here is one excerpt:

The Indian government has a proposal, called the “One Nation, One Subscription” plan, to buy bulk subscriptions of the world’s most important scientific journals and provide them free to everyone in India. Given the porousness of the internet, and the widespread availability of VPN services, general worldwide access is likely to result. Sci-Hub, based in Russia, already offers open access to many scientific publications.

But why stop there? Rather than just reproducing published articles, the publication process could be opened up altogether.

And the key part:

The biggest problem for an open-access regime is how to ensure good refereeing, which if done correctly raises the quality of academic papers. Under the current system, editors decide which papers get refereed, and they choose the identities of the referees. Those same referees are underpaid and underincentivized, and often do a poor or indifferent job.

Many of the original papers on mRNA vaccines, for example, were rejected numerous times by academic journals, hardly a ringing endorsement of the status quo. More generally, since publication is currently a yes/no decision, the refereeing system creates incentives to avoid criticism and play it safe, rather than to strike out with bold new ideas and risk rejection.

Under my alternative vision, research scientists would be told to publish one-third less and devote the extra time to volunteer refereeing of what they consider to be the most important online postings. That refereeing, which would not be anonymous, would be considered as a significant part of their research contribution for tenure and promotion. Professional associations, foundations and universities could set up prizes for the top referees, who might be able to get tenure just by being great at adding value to other people’s work. If the lack of anonymity bothers you, keep in mind that book reviews are already a key determinant for tenure in many fields, such as the humanities, and they are not typically anonymous.

Freer entry yes, open access yes, but also more refereeing.

Blog and Substack contest winners

To date there are three:

1. Anton Howes for his Substack Age of Invention.  He is a historian of invention, often but not exclusively focusing on the eighteenth century, here is Anton on Twitter.  As a separate matter, don’t forget Anton’s excellent recent book Arts & Minds: How the Royal Society of Arts Changed a Nation.

2. Works in Progress.  Here is their About page: “Works in Progress is a new online magazine dedicated to sharing novel ideas and stories of progress, and features original writing from some of the most interesting thinkers in the world.”  The major individuals behind Works in Progress are Sam Bowman, Saloni Dattani, Ben Southwood, and Nick Whitaker, all with bios at the previous link, all strong intellectual forces.

Note also: “Works in Progress is always looking for new writers for upcoming issues and our blog. Reach out if you want to talk about writing for us, with a short summary or abstract of your piece.”

3. Alice Evans, lecturer at King’s College London.  Here is Alice on Twitter.  She is working on “”THE GREAT GENDER DIVERGENCE” What explains global variation in gender relations?” and here is her related blog on that same topic.  Here is her famous post on gender relations in north vs. south India.  Her home page also links to her podcast.

I do expect there will be further awards, and I will keep you posted (here is the original announcement).  If you just started writing a blog and submitted, you may still be in the running for the future. In the meantime, congratulations to these winners!

The Nobel Prize: Milgrom and Wilson

The 2020 Nobel Prize in Economics goes to Paul Milgrom and Robert Wilson for auction theory and the improvement of auction designs. The Nobel Committee has a popular introduction and good scientific overview of auction theory. Billions of dollars of spectrum and other natural resources have been allocated using auctions designed by Milgrom and Wilson and their co-authors.

The money won’t mean much to these winners, who have made plenty of money advising firms about how to bid in the auctions that they designed. Milgrom’s firm Auctionomics advertises its service and Milgrom notes:

Milgrom has advised bidders in radio spectrum auctions, power auctions, and bankruptcy auctions. One advisee, Comcast and its consortium, SpectrumCo, followed the advice of a Milgrom’s team in FCC Auction 66 to achieve the most exceptional performance in US spectrum auction history. SpectrumCo saved nearly $1.2 billion on its spectrum license purchases compared to the prices paid by other large bidders – such as T-Mobile and Verizon – for comparable spectrum acquired at the same time in the same auction. SpectrumCo’s tactics included a $750 million jump bid – the largest in the history of US spectrum auctions and a move that prompted the FCC to change the auction rules.

You can figure that Milgrom got a percentage of those savings! Milgrom also advised Yahoo and Google, among other tech firms, on their advertising auctions.

My post Mechanism Design for Grandma written for the Hurwicz, Maskin and Myerson Nobel, has some background on auctions.

Auction theory and auction practice arose together–this is not a case of theory being rediscovered decades later by practitioners but of the demands by practitioners leading to new theory and new theory leading to new institutions. The Nobel committee notes:

In the early 1990s, an explosion of the demand for mobile communication made the U.S. federal government decide to use an auction for allocating radio-spectrum licenses among telecommunication firms. Previously, the U.S. Federal Communications Commission (FCC) had only been allowed to rely either on administrative procedures—commonly referred to as “beauty contests”—or on lotteries. These methods had notably failed in a number of complex settings, at the expense of both taxpayers and end-users…The obvious alternative is to adopt an auction to as-sign licenses. In fact, as early as in the 1950s, the 1991 Laureate Ronald H. Coase argued that the basic principle should be to allocate objects, such as broadcasting licenses, to the firms who will make the most efficient use of them, and the best way to identify these firms is to assign the objects through a competitive price mechanism (Coase, 1959).

…Following the FCC policy shift, multi-object auctions turned from an esoteric topic at the fringe of microeconomic theory to a hot research topic almost overnight.

…For the 1994 FCC auction, the final version of the newly designed auction was the Simultaneous Multiple Round Auction (SMRA)…[which] raised some $20 billion for the U.S. federal government, twice the forecasted amount. This outcome attracted considerable media attention and led other governments to set up their own auctions. The U.K. 3G spectrum auction that concluded in 2000 raised about $34 billion for the British government (Binmore and Klemperer, 2002). The SMRA auction format became the dominant design for spectrum sales worldwide, and versions of it have been used in Canada, Finland, Germany, India, Norway, Poland, Spain, Sweden, theU.K., and the U.S. These auctions have generated hundreds of billions of dollars for governments worldwide.

Perhaps the most impressive culmination of this work was the 2017 incentive auctions which “simultaneously” bought licenses from over-the air broadcast television stations and resold them to modern cellular phone bidders while respecting constraints so that over-the-air frequencies could be repackaged in ways such that they would not interfere with one another. The auction bought licenses for $10 billion, sold them for $20 billion, generating $10 billion in profit and generating an even larger increase in consumer surplus.

The first is a reverse auction that determines a price at which the remaining over-the-air broadcasters voluntarily relinquish their existing spectrum-usage rights. The second is a forward auction of the freed-up spectrum. In 2017, the reverse auction removed 14 channels from broadcast use, at a cost of $10.1 billion. The forward auction sold 70 MHz of wireless internet licenses for $19.8 billion, and created 14 MHz of surplus spectrum. The two stages of the incentive auction thus generated just below $10 billion to U.S. taxpayers, freed up considerable spectrum for future use, and presumably raised the expected surpluses of sellers as well as buyers.

These auctions also brought home that economics is now tied to computer science. The complexity of the allocation process was so high that new algorithms had to be devised. In particular, repackaging of the frequencies involved solving hundreds of thousands of graph-coloring problems, an NP-hard problem. Computer scientist Kevin Leyton-Brown was brought in to design and optimize the necessary algorithms. At the same time, Milgrom and Segal had to prove that their auction could be characterized in such a way that it could be solved in reasonable time by known algorithms.

Computer scientist Tim Roughgarden has an excellent video lecture on how implementing the incentive auction required a combination of cutting-edge economics and computer science. More generally, mechanism design in the real world, including auction design, Uber’s supply and demand mechanism, blockchains like bitcoin and many other examples, requires both economists and computer scientists to devise institutions and algorithms that incentivize socially beneficial behavior and that can also be solved in real time for real populations.

See Tyler’s post on Milgrom and on Tyler’s post on Wilson for much more, going well beyond their contributions to auction theory.

New Emergent Ventures anti-Covid prize winners

The first new prize is to Anup Malani of the University of Chicago, with his team, for their serological research in India and Mumbia.  They showed rates of 57 percent seroprevalance in the Mumbai slums, a critical piece of information for future India policymaking.  Here is the research.

Professor Malani is now working in conjunction with Development Data Lab to extend the results by studying other parts of India.

The second new prize goes to 1Day Sooner, a 2020-initiated non-profit which has promoted the idea of Human Challenge Trials for vaccines and other biomedical treatments.  Alex here covers the pending HCTs in Britain, as well as providing links to previous MR coverage of the topic.

I am delighted to have them both as Emergent Ventures prize winners.

Here are the first, second, and third cohorts of winners of Emergent Ventures prizes against Covid-19.

One of those boring yet fascinating innovation articles

Physicians who also have extensive training in scientific methods, often a Ph.D., are ideally suited to learn from the unusual clinical manifestations of Covid-19, such as strokes in young adults and autoimmune Kawasaki syndrome in children. Physician-scientists, however, are becoming extinct in the United States, comprising only about 1% of all physicians today, and with few young clinician researchers joining their ranks.

A solution to this crisis might be found in a quiet research program at the National Institutes of Health that flourished in the shadow of the Vietnam War. It may well have been the greatest medical research program in modern history. The two-year program, officially known as the NIH Associates Training Program, was started in 1953 as a way to bring newly minted physicians to the NIH campus in Bethesda, Md., so they could do research for two to three years under the guidance of senior NIH investigators…

Nine physicians who trained at the NIH during this period went on to win Nobel Prizes. From the class of 1968 alone, Robert Lefkowitz discovered a family of cellular receptors that one-third of all approved drugs target; Michael Brown and Joseph Goldstein discovered a cholesterol receptor that led to the development of cholesterol-lowering statin medications; and Harold Varmus discovered some of the fundamental mechanisms of cancer.

Here is the full StatNews article by Haider J. Warraich.

The rise and fall of the corporate R&D lab

Of course, Bell Labs itself later grew to be one of the marquees of commercial labs—in the late 1960s it employed 15,000 people including 1,200 PhDs, who between them made too many important inventions to list, from the transistor and the photovoltaic cell to the first digitally scrambled voice audio (in 1943) and the first complex number calculator (in 1939). Fourteen of its staff went on to win Nobel Prizes and five to win Turing Awards.

That is from Ben Southwood’s new essay on that topic, on the new and important on-line publication Works in progress.

Emergent Ventures winners, 10th cohort

Sebastian Garren, to found John Paul II Preparatory School’s South Campus in St. Louis, a hybrid on-line and in-person educational alternative for K-12, also stressing Western history and the classics.

John Durant, for career development and writing, and explorations into notions of angels.

Mishka Orakzai of Peshawar, Pakistan, to support her thiscodeworks project intent to make snippets of code more available.

Krishaan Khubchand, 20 years old, studying law at Birkbeck, to study mega-projects and capital allocation, he is also a Progress Studies fellow.

Vignan Velivela.  He started as a robotics engineer at Cruise Automation, is a member of the Explorers Club (wikiBBC) for his work on the lightest planetary rover at Carnegie Mellon, worked on a peer-to-peer lending startup in India that was acqui-hired by PayTm, went to college (BITS Pilani) in India studying EE and Economics, and now is co-founder of AtoB.

Wasteland Ventures (no web page), to support their efforts in talent search and development.

And two Emergent Ventures anti-Covid prizes have been awarded to:

Witold Wiecek, Bayesian statistician and consultant, for his work on the Bayesian modeling of the COVID-19 epidemic, and the design of an optimal vaccine portfolio, in cooperation with the Accelerating Health Technologies team.

Arthur W. Baker, for his efforts on incentive design for vaccines, in cooperation with the Accelerating Health Technologies team.

Here are previous winners of Emergent Ventures grants and prizes.

Why not buy up a college campus?

Could you set higher education right?  Why don’t the super-wealthy pursue this route?  I consider those questions in my latest Bloomberg column, here is one excerpt:

Even if enough people wanted to move to Vermont [the site of the campus for sale], this new university would basically have to re-create the talent pool at other, more established institutions, thus replicating their basic character. If anything, the new school probably would have to hire the malcontents, as they are the most likely to leave their current jobs for a new and untested venture. If you think existing universities have too much infighting and rancor, wait till you see this new project.

You might think that the leaders of the new college could shape and improve the incentives of their faculty. But that isn’t easy. For many talented people, the key incentives are outward-facing — they will be looking to get published and win rewards, prizes and eventually job offers from the outside world. Creating a new institution does not change these basic incentives, for better or worse.

Alternatively, you might try to make their rewards more inward-looking — pay them a big bonus if they contribute to campus life in the right way. But that tends to be expensive and to reward people who are good at gaming the system, again increasing the risk of fractiousness. Nor would it attract academic superstars, who typically excel at marketing themselves to the wider and wealthier outside world.

And:

The issue is how to attract a cluster of talent. Smart people wish to go to Harvard because other smart people go there, and that creates a self-reinforcing dynamic. This is in contrast to the corporate world, where top talent is (sometimes) willing to join risky new ventures because of the financial reward. If you were an early employee at Facebook, for example, you are probably much wealthier now than if you had gone to work for Yahoo or AOL.

In other words, I believe such an enterprise would be doomed to failure.  Do read the whole thing.