peteg's blog

Alvin Roth: Who Gets What — and Why: The New Economics of Matchmaking and Market Design.

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Kindle. This is Alvin Roth on his life's work, viz matching markets. He begins by carefully distinguishing these from commodity markets, which are constructed by lumping products that are sufficiently similar into buckets that are traded identically. (Apparently this was the central innovation of the Chicago Board of Trade a long time ago.) Specifically these tend to ignore the identities of the producers and consumers, and a key characteristic of matching markets is that this is not a valid move. Roth has many cute summaries:

Matching is economist-speak for how we get the many things we choose in life that also must choose us.

I'm sure he enjoys his wordplay too:

The economic world is just as full of surprising detail as the natural world, and markets also often arise by a kind of evolution, by trial and error, without any intelligent design. But markets can also be designed, sometimes from scratch but often after trial and error leads to a market failure.

Mostly this is the greatest hits of his professional career. He characterizes market failure with lots of examples. They can be:

  • Too thin, with not enough buyers or sellers;
  • Congested, which is to say that deals should be struck once sufficient information exchange has taken place; and
  • Unsafe, where the participants are discouraged from honestly revealing their preferences, and hence engage in oftentimes complex and expensive strategic behaviour.

For the design of matching markets, he pushes the classic deferred acceptance algorithm, which involves a central clearinghouse that essentially resolves the preferences of the two distinct kinds of participants in one go. (All preferences are submitted ahead of time, so it does not involve any price discovery.) In contrast a buyer in a financial market is often simultaneously a seller, and the recent attempts in the U.S. to make these more efficient by introducing competing venues is heading in the opposite direction. Similarly the latter encourage dark pools and other off-market mechanisms that leave the public market as the relatively toxic (unsafe) venue of last resort. The resulting regulatory framework is well-intentioned but not theoretically grounded. Roth's off-the-cuff suggestion here is auctions at one-second frequencies, to curtail the HFT arms race.

There is some discussion of repugnant markets, which is expected as he spent quite a bit of time discussing how kidney transplants could be made more efficient while remaining the gift of donors. Again, more wordplay:

To return to the question of kidney sales, virtually no one objects to kidney donation for transplantation. But many people clearly regard monetary compensation for organ donation as a very bad idea, maybe even the kind of bad idea that only bad people have.

... and Roth makes many references to Iran being the only place on Earth where kidneys can be bought and sold (in 2014). There is also an attempt to rehabilitate Hayek by quoting more of him, as is often done for Adam Smith.

Auctions are held up as having similar properties as the deferred acceptance algorithm. I wanted more formal details. It strikes me that the spectrum auctions are so complex that the bidders have to do serious computation between bids, which makes the timing between rounds critical to the fairness of the result. I hadn't heard of the rural hospitals theorem before, but seeing it makes it clear why those hospitals are unlikely to get as many young doctors as they'd like despite the magic of the centralized clearinghouse. Also I'd like to hear more about Islamic finance; taking an equity stake in a home is quite different from simply loaning the money for the house.

Many of my initial impressions — that even a Nobel prize could not satisfy this ego — were eventually put to rest, especially by the extensive notes that make up the final quarter of the book. Roth writes lucidly and anyone disappointed by the lack of technical depth here should certainly pick up his classic from 1990: Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis with Marilda Sotomayor, which tells many of the same stories. My original interest was in phrasing deductive liveness arguments, and I had hoped that showing the termination of the deferred acceptance algorithm was curly, but I fear it is not. I was also wondering how it relates to Arrow's Theorem.

Tim Winton: Island Home.

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Kindle. The last thing I read by Winton was his earlier memoir, Land's Edge. This one is a grab bag of short pieces, covering parts of his early life up to now-ish. None of it really stuck with me, as I usually find with his work, but I've been quite distracted by my impending departure from Chicago and again cannot fault him. Winton observes that the Old World is so comprehensively denatured, and the view from there so anthropocentric that it is difficult to square with Australian geography, and often quite hostile to it. He doesn't talk about the New World so much, where the first national park was established; perhaps this space is simply too self-contradictory for his purposes, or never appealed as somewhere to visit or live. The attempted militarization of Australian culture via the Galipoli myth. Patrick White, Voss. He evokes long-gone Australian upbringings, of kids living on the edge of settlement and freely moving between squalor and urban comfort, of the isolation wrought by the motor car. The destruction of the Swan River. Grotty ways of turning whales and seals into money. More hermits. Some engagement with Aboriginal culture. The blue-ringed octopus. The reluctant environmental activist. Lockean property rights. A defence of his use of the demotic. Enough to make me wonder why I'm not going straight home.

The doco that accompanies the book. As always there is extensive coverage in the Australian media, none of it worth pointing at.


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Spielberg, and excellent work from Day Lewis. Far superior to Bridge of Spies, but not in the same league as There Will Be Blood. Sprawling. Huge cast. Much talking.

The Artistic Home: The Time of Your Life by William Saroyan.

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Goldstar ticket: $14.00 + $4.25 service fee = $18.25. Rode the bike up from South Oakley. The forecast was for high teens but it turned into a beautiful Autumn day of light winds and twenty degrees. This was the first venue I went to in Chicago; their production of The Late Henry Moss put me off the rest of the previous season. I guess I was sold on some kind of nostalgia and a solid review by Dan Jakes in the Reader. This session was packed.

Well, I tried to get into it but was defeated by sleepiness. Should have had a caffeinated coffee beforehand. The play takes a similar ensemble form to Balm in Gilead but there is never more than half the cast on stage at once. The set perfectly evokes a dive bar down on the waterfront of San Francisco, 1939 (or so I imagine). The depression and coming war are in the background, and this is all small-scale trials and tribulations of people grafting in the neighbourhood, or getting in the way of that grafting. There's some very funny dialogue in the middle between the philosophizing longshoreman McCarthy and his childhood buddy Krupp, a cop. An anonymously rich man anchors proceedings, which is somewhat flawed as he almost always presents as the puppet master of his offsider.

Jacob Davis.

There Will Be Blood

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I saw this back in 2008 but didn't recall much past the opening scene, where Day Lewis is prospecting with a pick. Excellent, but somehow not totally satisfactory; perhaps the vacuity of get-rich misanthropes is laid on a little too thick. #175 in the IMDB top-250.

Bridge of Spies

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4pm session at the AMC River East 21, $11.29 + $1.35 tax = $12.64. I used the auto box office this time. Packed. This is more greatest-generation auto-boosterism, an Atticus Finch from the cold war, right down to the there's-no-place-like-home, even when home is Kansas. (Perhaps I've previously missed the irony in that.) Spielberg directs, and Tom Hanks plays pure American hokum as only he can. Somewhat surprisingly this is a Coen brothers script. Mark Rylance is solid as the Russkie spy. Sebastian Koch jumps from West German playboy playwright (The Lives of Others) to East German lawyer. Much is made of the asymmetric treatment of prisoners: the US being kindly and hand wringing, while the Germans and Russkies go in for deprivation and implied torture. (It is also observed that wintering in an East Berlin gaol in 1960 was not so much worse than in a West Berlin hovel.) Secretary of State (Dull, Duller) Dulles is mildly rehabilitated. Cheap thrills abound during the interminable talking. All in all, just another milking of the days of moral clarity.

Manohla Dargis suckered me by making it a critic's-pick. I didn't see Lincoln and probably should have in preference to this as Day Lewis is the superior actor. There is far less moral ambiguity on show than she thinks there is. Dana Stevens is happy to apologize for Spielberg's excesses.

This is England '90

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Shane Meadows completes the transformation of his masterful This is England into a middling soap opera. Once again the actors are great, but the characters have lost their edge as children and weddings and old enmities take their inevitable toll on story telling opportunities. Implausibility is one way out, and the one taken. Why wasn't Riz Ahmed in this?

Four Lions

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Riz Ahmed. Brave and sometimes excruciatingly funny, mostly at the level of one liners. Endlessly quotable. David S tells me that the writer/director Chris Morris has done a lot more of this kind of thing.


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I passed this one up when it was in the cinemas last year, and that proved to be a wise move. Dana Stevens pegged it just right: Jake Gyllenhaal over-does it here as a soulless bottom-feeding entrepreneur from some distant time. Riz Ahmed is solid as his offsider, and was the main draw — which means Four Lions is next on the list. Anthony Lane is more indulgent. A. O. Scott.

Kim Stanley Robinson: A Short, Sharp Shock

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Kindle. David S. pointed me to Kim Stanley Robinson. I chose this one purely on length. Drecky. Not much of a premise, and too many words spent on nothing in particular. It's a linear quest, and like a 1990s first-person shooter, who cares as to why. Everyone's got a philosophy, everyone's got a creation myth. All the women are beautiful and willing. Etc. Robinson might be awesome but that is not evident here.

Salman Rushdie: East, West

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Kindle. I read this ages ago and only remembered that the porter is a Grand Master. It is mercifully short. Far from his best work.

The Duellists

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Another suggestion from Roman W. Ridley Scott must have seen Barry Lyndon and thought he could do better. Well, it's a lot less banal, and he wisely has Harvey Keitel keep his mouth mostly shut. (Keitel has done some good stuff, but that is set almost entirely in New York.) Keith Carradine is fine in the lead. He looks a bit like Cristopher Lambert, and yeah, Highlander pretty which writes itself from there. They spend a lifetime not finishing each other off in Napolean-era duels. The original complaint is almost risibly minor. I guess I didn't really get the point, which may just mean I don't think too hard about the stuff I'm watching these days.

Gregory David Roberts: Shantaram.

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Binge-read on the Kindle. Yeah. I remember buying the original hardcover in London in 2004, and eventually giving it to Iain. There are loads of critiques out there, though all you need to know is summarised by Tyler Cowen's observation that this "is one of the best bad books I have read." Well, yes, yet another junk memoir, but without much explication of the experience of being on heroin, beyond the banal observation that it eats your life. For Roberts the skag was pure escapism, much like this book was for me. It lacks Clune's ruefulness, that's for sure; I guess that's what happens when you have the guts to go full-criminal. It also owes a huge debt to The Godfather, and perhaps aimed to supplant it as the go-to airport novel.

The whole thing is terribly cinemantic, with many parts reading like instructions to location scouts, grips and best boys, which of course brings into question how much is fact and how much is fiction. The wikipedia page for the book is pretty harsh, but Roberts invites this by wanting it to go both ways, and having (as they say in the U.S.) a healthy ego. This is not good versus evil so much as the author's balls-to-the-wall fantasy self busting heads, at least when he's not being tortured. His philosophy is trite; the drive toward ultimate complexity is just another teleological misadventure and not something that we should necessarily bother with at all. (That we are the universe observing itself is ... well, it's a cliché, right?) His lack of interest in India's defining caste system is damning. It pales in comparison to The Moon of Hoa Binh, which really stretches minds.

Much that's in this book I felt I learnt elsewhere, which may be me selling Roberts short. For instance, I'm sure Salman Rushdie talks about Haji Ali Dargah and larger Bombay at length in Midnight's Children, and I cannot forget how Persians use sugar cubes when drinking tea. Entirely coincidentally, the sequel is out on October 13. I preordered the version overstuffed with self-aggrandizing marginalia that is likely to shit me to tears. The movie is apparently still in the works; Joel Edgerton to star?

The Medusa Touch

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On Roman W's recommendation, over two nights. This is Richard Burton as some kind of god of destruction. Lee Remick's accent is American when she's with Burton, and Australian (?) during her exchanges with supercop Lino Ventura. A plane slams into an office building in the centre of London. This came about six years after The Ruling Class and doesn't bother to motivate its loathing of the English aristocracy; did things move that far that fast? And what has happened since?