Repugnant transactions
Al Roth
Harvard University
Kahneman Lecture
IAREP/SABE World Meeting 2008
at LUISS, Rome
September 4, 2008
Plan of the talk
1. Introduce what I mean by repugnant
transactions and try to convince you that
there are a lot of them around.
2. Survey repugnance more systematically
and try to convince you that it may be
important in the economy.
3. Consider some reasons why adding
money to a transaction sometimes makes
it repugnant (with special attention to
kidney sales)
2
4. Outline some research directions.
Section 301 of the National Organ Transplant Act
(NOTA), 42 U.S.C. 274e 1984 states:
“it shall be unlawful for any person
to knowingly acquire, receive or otherwise
transfer any human organ for valuable
consideration for use in human
transplantation”.
3
Article 21 of the Council of Europe’s (2002)
Additional Protocol to the Convention on Human
Rights and Biomedicine, on Transplantation of
Organs and Tissues of Human Origin:
“The human body and its parts shall
not, as such, give rise to financial gain”
4
You can’t eat horse or dog meat in
a restaurant in California.
1. It’s against the law.
•
California Penal Code Section 598 states in
part “…horsemeat may not be offered for
sale for human consumption.”
2. Many Californians find it repugnant that
anyone should eat a horse
•
and this repugnance was enacted into law,
by popular referendum (Prop. 6 in 1998)
5
Note: there aren’t laws against eating
cockroaches
• A big part of behavioral economics focuses on
regularities in peoples’ tastes that were
unmodeled in classical models.
– Strong tastes for avoiding losses, for fairness, for
immediate as opposed to delayed rewards…
• These are largely tastes revealed in choices that
people make for themselves.
• My talk today is about tastes that people have
concerning choices that other people might
make—I’m going to argue that these have big
consequences in what markets we see.
– This is something I see as a market designer, even
for markets and allocation mechanisms more usual
than kidney exchange.
6
• The law against eating horses is different from
laws that seek to protect consumers by
governing the slaughter, sale, preparation and
labeling of animals used for food.
• And it is different from the laws that seek to
prohibit the inhumane treatment of animals,
including animals that are routinely slaughtered
for food
– E.g. different from the recently established and then
abandoned ban on foie gras in Chicago restaurants
(and different from e.g. bans on fox hunts and cock
fights).
– It is not illegal in California to kill horses or dogs,
although the California law outlaws such killing “if that
person knows or should have known that any part of
that horse will be used for human consumption.”
7
8
It’s not just Americans
• Genetically Modified (GM) crops in Europe
• Prince Charles warns GM crops risk
causing the biggest-ever environmental
disaster (Telegraph, Aug. 12, 2008)
– Relying on "gigantic corporations" for food, he
said, would result in "absolute disaster".
9
Swiss to ban cat fur trade
after pets vanish
(Telegraph, March 7, 2008)
Switzerland is to ban the trade in cat fur following an outcry
in France over the disappearance of hundreds of domestic
cats allegedly poached for their soft coats.
Under Swiss law, it is permitted to kill stray cats and sell
their fur for £3 a piece to tanneries.
Cat fur products in clothes and belts are believed to ease
rheumatism.
However, the Swiss have come under intense pressure to
end the practice after hundreds of domestic cats vanished
over the French border.
10
EU to ban cat and dog fur trade
(BBC, March 31, 2008)
The European Parliament has backed a
ban on cat and dog fur imports, in a
move to curb the slaughter of millions
of cats and dogs in China.
MEPs have agreed with EU member states on
the text of the law, which will come into effect
11
from 31 December 2008.
A different view
• Saudi Arabia bans sale of dogs, cats in
capital (NY Times, July 31, 2008)
• Saudi men arrested for 'flirting' (BBC,
Feb. 23, 2008)
• Saudis ban red roses for Valentine's
Day (Telegraph, Feb. 12, 2008)
• Saudi Women Can Now Stay in Hotels
Alone (NY Times, Jan. 21, 2008)
• Saudi Arabia to lift ban on women
drivers (Telegraph, Jan. 21, 2008) (??) 12
Miscellaneous developments, July 2008
• Germany Recoils at the Assisted Suicide
of a Healthy, 79-Year-Old Woman (NY
Times, July 3, 2008)
• Declaration of Istanbul Sees Organ
Transplantation Worldwide Threatened by
Organ Trafficking and Transplant Tourism
and Commercialism (Lancet, July 5, 2008)
• SKorea to end ban on revealing sex of
babies (NY Times, July 31, 2008)
– “…neighborhood clinics …offered gender information in various ways,
including telling parents whether the baby is ''cute'' or ''energetic'' -13
allusions to girls or boys.”
Repugnant transactions (somewhere, or when)
• Bodies and body parts
– Cadavers for anatomical study, deceased-donor
organs, blood and tissue
• Grave robbers
• Museum exhibits
– Live donor organs (kidneys, livers)
• Reproduction and sex
– Adoption (children may not be purchased from the birth mother)
– Surrogate mothers, egg and sperm donation, abortion, birth
control (all other reproductive services may be purchased)
• Egg donation for research (may not be compensated in MA)
– Prostitution, pornography
– Marriage with bride price, dowry, polygamy, gay marriage
• E.g. India’s Dowry Prohibition Act, 1961
• Labor
– Indentured servitude, slavery
– Volunteer army, mercenary soldiers
– Discrimination on race, gender, handicap, marital status, etc
14
• Words and ideas
– obscenity and profanity (FCC broadcast regulations,
movie ratings, 1959 Post Office ban on Lady
Chatterley’s Lover)
– blasphemy (e.g. ban on sale of Rushdie’s “Satanic
Verses”)
• Risk
– Life insurance (“insurable interest”)
• for adults
• For children?
• Stranger (or Investor) Owned Life Insurance (SOLI) and
“Viatical settlements”—third party markets and funds. ( “dead
pools”)
– Gambling,
– prediction markets (“terrorism futures market”)
15
• Finance
– Short selling, currency speculation
– Interest on loans (state usury laws, Islamic banks)
• Pollution markets:
– Title IV of the 1990 CleanAirActAmendments (tradeable emissions
entitlements)
– Summers’ 1991 World Bank memo on dirty industries in LDC’s
• Price gouging
– After disasters (e.g. Hurricane Katrina)
– Ticket scalping (ticket auctions)
• Religion/Sports (amateur/professional)
– Sale of indulgences, sale of religious offices (“simony”)
– Endorsements/payments for amateur versus pro athletes
– Drugs and sports
• Food, drink, and drugs
– Horse, dog meat (illegal in CA, but legal in Europe, Asia…)
– Alcohol (Prohibition)
– Marijuana and narcotics
• Vote selling, bribery (not ok, but how about frequent flier miles?)
• Dwarf tossing
16
The arrow of time points in both
directions on repugnance of markets
• There are markets that are repugnant
today that once were not (or not
sufficiently to serve as a binding
constraint)
• And there are markets that were once
repugnant but no longer are.
17
Slavery and indentured servitude
• Once both kinds of markets were common
in the U.S.
• Indentured servitude was once one of the
common ways for Europeans to buy
passage across the Atlantic to America.
• Outlawed by 13th Amendment, US
Constitution, 1865.
• You can’t even sell yourself into slavery or
indentured servitude.
18
Lending money for interest
• Once widely repugnant, now not (with the
important exception of Islamic law).
• Albert Hirschman paraphrases Max
Weber’s question in “The Spirit of
Capitalism”:
– “How did commercial, banking, and similar
money-making pursuits become honorable at
some point in the modern age after having
stood condemned or despised as greed, love
of lucre, and avarice for centuries past?”
19
Credit. Man’s Confidence in Man. “Commercial credit is the creation of
modern times and belongs in its highest perfection only to the most enlightened
and best governed nations. Credit is the vital air of the system of modern
commerce. It has done more — a thousand times more — to enrich nations
than all the mines of the world.” Daniel Webster, March 18, 1834.
20
Changing repugnancies can
interact
• Bankruptcy law
– In colonial America and in the early years of
the Republic, insolvent debtors could be
imprisoned, or sentenced to indentured
servitude
– As debt became less repugnant, and
involuntary servitude more repugnant,
bankruptcy law has come to provide
protection to the debtor as well as to the
creditor
21
Repugnance is often confounded
with other objections
• E.g., while hiring mercenaries (Condottieri) was
once an accepted way of dealing with military
affairs, it has largely fallen out of favor since the
rise of states with standing armies.
• This is not only because of repugnance towards
the fact that mercenaries kill for pay rather than
for state-sanctioned duty or patriotism.
• But such repugnance plays a role: e.g. the
Geneva Conventions: “A mercenary shall not
have the right to be a combatant or a prisoner of
war.”
22
Repugnance + negative
externalities
• Prostitution
– Repugnance at commercializing sex, but also neighborhood
externalities (crime, public health, etc.)
• Pornography
• Obscenity
– FCC broadcast regulations (externalities—doesn’t apply to
subscription radio…)
– E.g. 1959 Post Office ban on Lady Chatterley’s Lover (private
consumption)
– (cf. Fairman, Christopher M., "Fuck" (http://ssrn.com/abstract=896790 ,
Cardozo Law Review, 28, 2007, forthcoming.)
• Profanity (externalities)
• Blasphemy
– E.g. bans on Rushdie’s “Satanic Verses” seem primarily aimed
at limiting private consumption (not to mention production…)
23
Blasphemy: Article 40, 6, 1, Irish consititution
• The State guarantees liberty for the exercise of the
following rights, subject to public order and morality:
• i. The right of the citizens to express freely their convictions
and opinions.
• The education of public opinion being, however, a matter of
such grave import to the common good, the State shall
endeavour to ensure that organs of public opinion, such as
the radio, the press, the cinema, while preserving their
rightful liberty of expression, including criticism of
Government policy, shall not be used to undermine public
order or morality or the authority of the State.
• The publication or utterance of blasphemous, seditious, or
indecent matter is an offence which shall be punishable in
24
accordance with law.
Repugnance + addiction/coercion
• Alcohol
– E.g. Prohibition (in a number of countries)
• 18th amendment U.S. Const. 1917 (prohibition)
• 21st amendment 1933 (repeal of 18th amendment)
• Narcotics
– Strenuous bans both on national markets and
international trade
• Gambling
– also negative externalities like bankruptcy and crime?
• Prostitution/human trafficking
• Child pornography
25
Repugnance + incentives
• Life insurance (“insurable interest”)
• for adults
– Justice Oliver Wendell Holmes, Jr. in a 1911 case involving
insurable interest: “A contract of insurance upon a life in which
the insured has no interest is a pure wager that gives the insured
a sinister counter interest in having the life come to an end.
– Justice Holmes’ opinion continues: “On the other hand, life
insurance has become in our days one of the best recognized
forms of investment and self-compelled saving. So far as
reasonable safety permits, it is desirable to give to life policies
the ordinary characteristics of property.”
• For children?
• Stranger (or Investor) Owned Life Insurance (SOLI) and
“Viatical settlements”—third party markets and funds.
(“dead pools”)
26
“Uncomplicated” cases of
repugnance as a constraint on
markets may help clarify what’s
going on
27
Dwarf Tossing
28
Ontario Dwarf Tossing Ban Act, 2003
• Bill 97 2003 An Act to ban dwarf tossing
• Her Majesty, by and with the advice and consent of the
Legislative Assembly of the Province of Ontario, enacts
as follows:
• Dwarf tossing banned
• 1. (1) No person shall organize a dwarf tossing event or
engage in dwarf tossing.
• Offence
• (2) A person who contravenes subsection (1) is guilty of an offence
and on conviction is liable to a fine of not more than $5,000 or to
imprisonment for a term of not more than six months, or to both.
• Commencement
• 2. This Act comes into force on the day it receives Royal
Assent.
• Short title
• 3. The short title of this Act is the Dwarf Tossing Ban Act, 2003.
29
Dwarf tossing
U.N. backs 'dwarf-tossing' ban
Friday, September 27, 2002: CNN
GENEVA, Switzerland --A French ban on the
controversial practice of "dwarf-tossing" has
been upheld by the U.N. Human Rights
Committee.
• Manuel Wackenheim began his fight in 1995 after the French
ban meant he could no longer earn a living being thrown around
discotheques and nightclubs by burly men. But on Friday,
Wackenheim -- who measures 1.14 metres (3 feet 10 inches) -lost his case when the U.N. human rights body ruled the need to
protect human dignity was paramount. In a statement, the U.N.
Human Rights Committee said it was satisfied "the ban on
dwarf-tossing was not abusive but necessary in order to protect
public order, including considerations of human dignity.“ The
committee also said the ban "did not amount to prohibited
discrimination.“ The pastime, imported from the United States
and Australia in the 1980s, consists of people throwing tiny
stuntmen as far as possible, usually in a bar or discotheque.
30
Repugnance can be hard to predict
• But see e.g. Tetlock et al. on taboo
tradeoffs and Baron et al. on protected
values…
• Why is dwarf tossing widely regarded as
repugnant?
• It’s not just the small size of the dwarfs
– E.g. jockeys are small
31
Wife Carrying—Not Repugnant?
US champs 2005--traditional
32
World champs—Estonian position
Repugnant or not?
• Pollution markets:
– Title IV of the 1990 Clean Air Act Amendments
(tradeable emissions entitlements)
– Summers’ 1991 World Bank memo on dirty industries
in LDC’s
• “Price gouging”
– After disasters (e.g. Hurricane Katrina)
– Ticket scalping
• But TicketMaster is now running ticket auctions
• Kickbacks, bribes, etc.
– But frequent flier miles are ok.
33
Reproduction
– Adoption
• Limits on cash payments to mothers
– Surrogate mothers, egg and sperm donation
• Largely unregulated markets (cf. Debora L. Spar
The baby business : how money, science, and
politics drive the commerce of conception.
• Egg donation for research (may not be
compensated in MA)
– abortion, birth control
34
Cadavers
“RESURRECTION MEN” (editorial)
The Lancet, Volume 1, Issue 19, 8 1824
• Opens with the observation that a resurrection man has
recently been sentenced to transportation for seven
years, and deplores that it is illegal to obtain bodies for
dissection, except executed murderers.
• “The legislature should be entreated to…devise…some
plan that would [make cadavers legally available], and
which at the same time would not irritate the feelings of
those who are naturally prejudiced against dissection.
All that the legislature now does to forward this
science…is to give the bodies of criminals executed for
murder to be dissected; this we fear…tends to keep
up…the prejudice which is at present so strong against
the obtaining of bodies for dissection.”
35
Laws can change
“Cheapest mode of procuring Bodies.—
Resurrection Men” •The Lancet, 3, 61,
27 November 1824, (unsigned letter)
• “The procuring of bodies, for the purpose
of dissection, will probably always be
considered an illegal act in England…”
• But the Anatomy Act of 1832
considerably expanded the sources of
legal cadavers for dissection.
36
Bodyworlds exhibits: 2006
37
38
Money and repugnance
• Often x+$ is repugnant, even when x
alone isn’t.
– E.g. interest on loans,
– payments to birth mothers in adoption,
– prostitution
39
“Taboo tradeoffs” and “Protected Values”
• Tetlock, P.E., Kristel, O., Elson, B., Green, M., and Lerner, J . The
psychology of the unthinkable: Taboo trade-offs, forbidden base
rates, and heretical counterfactuals. Journal of Personality and
Social Psychology.
• Fiske, A. & Tetlock, P.E. (1999). Taboo trade-offs: Constitutive
prerequisites for social life. In S.A. Renshon and J. Duckitt (eds),
Political Psychology: Cultural and Cross-cultural Perspectives.
London: MacMillan.
• Tetlock, P.E. (1999). Coping with trade-offs: Psychological
constraints and political implications. In S. Lupia, M. McCubbins, &
S. Popkin (eds.), Political reasoning and choice. Berkeley: University
of California Press.
• Fiske, A. & Tetlock, P. E. (1997). Taboo trade-offs: Reactions to
transactions that transgress spheres of justice. Political
Psychology, 18, 255-297.
• Ritov, I., & Baron, J. (1999). Protected values and omission bias.
Organizational Behavior and Human Decision Processes, 79, 79–
94.
• Baron, J., & Leshner, S. (2000). How serious are expressions of
protected values. Journal of Experimental Psychology: Applied, 6,
40
183–194.
“We didn’t have time to pick up a bottle of wine, but this is
what we would have spent.”
(New Yorker cartoon.)
41
Money and repugnance
• There seem to be three principal lines of
argument about how adding money makes
a non-repugnant transaction repugnant:
– Objectification
– Coercion (“exploitation”)
– Slippery Slope
42
Objectification
• Article 21 of the Council of Europe’s
(2002) Additional Protocol to the
Convention on Human Rights and
Biomedicine, on Transplantation of Organs
and Tissues of Human Origin states “The
human body and its parts shall not, as
such, give rise to financial gain”
43
Coercion
• The National Bioethics Advisory Commission (2001),
writes that paying subjects to participate in medical
experiments may be coercive. They go on to say that, if
an institutional review board is concerned that the
subjects in an experiment may be economically
disadvantaged, it may require, to protect the subjects
from coercion, that the researchers reduce the payments
they make to participants
• (In contrast, experimental economists often think that
paying subjects in economic experiments, based on their
performance, is an essential element in creating an
economic environment in the laboratory in which the
experimenter can exercise some control over subjects’
preferences.)
44
Declaration of Istanbul
Published ahead of print on August 13, 2008
Clinical Journal of the American Society of Nephrology
http://cjasn.asnjournals.org/cgi/content/abstract/CJN.03320708v1?maxtoshow=&HITS=10&hits=10&RESULTFORMAT=&fulltext=Istanbul&searchid=1&FIRSTINDEX=0&resourcetype=HWCIT
• “The Istanbul Declaration proclaims that
the poor who sell their organs are being
exploited, whether by richer people within
their own countries or by transplant tourists
from abroad. Moreover, transplant tourists
risk physical harm by unregulated and
illegal transplantation. Participants in the
Istanbul Summit concluded that transplant
commercialism, which targets the
vulnerable, transplant tourism, and organ 45
trafficking should be prohibited.”
Slippery slope
• Dystopias resulting from changes in terms
of trade?
– E.g. kidneys used as collateral on loans?
• See e.g. Basu (2003) on bans on sexual
harassment.
46
Kidney transplants
• There are over 70,000 patients on the waiting
list for cadaver kidneys in the U.S.
• In 2006 there were 10,659 transplants of
cadaver kidneys performed in the U.S.
• In the same year, 3,875 patients died while
on the waiting list (and more than 1,000
others were removed from the list as “Too
Sick to Transplant”.
• In 2006 there were also 6,428 transplants of
kidneys from living donors in the US.
• Sometimes donors are incompatible with their
intended recipient.
• This opens the possibility of exchange .
47
Two Pair Kidney Exchange
Donor 1
Recipient 1
Blood type A
Blood type B
Donor 2
Recipient 2
Blood type B
Blood type A
48
4
“Paired kidney donation” an in-kind
exchange
49
Section 301,National Organ Transplant
Act (NOTA), 42 U.S.C. 274e 1984:
“it shall be unlawful for any person
to knowingly acquire, receive or
otherwise transfer any human organ for
valuable consideration for use in human
transplantation”.
50
Charlie W. Norwood Living Organ
Donation Act
Public Law 110-144, 110th Congress, Dec. 21,
2007
• Section 301 of the National Organ
Transplant Act (42 U.S.C. 274e) is
amended-- (1) in subsection (a), by adding
at the end the following:
• ``The preceding sentence does not
apply with respect to human organ
paired donation.''
51
Kidney Exchange—Creating a Thick (and
efficiently organized) Market Without Money
• New England Program for Kidney
Exchange—approved in 2004, started
2005.
• Organizes kidney exchanges among the 14
transplant centers in New England
• Ohio Paired Kidney Donation Consortium,
Alliance for Paired Donation (2007, Rees)
– 60 transplant centers and growing…
• National (U.S.) kidney exchange--2009?
– Looks like it’s (slowly) on the way (with some
questions still about how well it will be designed and
executed)
52
Kidney exchange clearinghouse design
Roth, Alvin E., Tayfun Sönmez, and M. Utku Ünver,
“Kidney Exchange,” Quarterly Journal of
Economics, 119, 2, May, 2004, 457-488.
____ “Pairwise Kidney Exchange,” Journal of
Economic Theory, 125, 2, 2005, 151-188.
___ “A Kidney Exchange Clearinghouse in New
England,” American Economic Review, Papers
and Proceedings, 95,2, May, 2005, 376-380.
_____ “Efficient Kidney Exchange: Coincidence of
Wants in Markets with Compatibility-Based
Preferences,” American Economic Review, June
2007, 97, 3, June 2007, 828-851
53
And in the medical literature
Saidman, Susan L., Alvin E. Roth, Tayfun Sönmez, M. Utku Ünver,
and Francis L. Delmonico, “Increasing the Opportunity of Live
Kidney Donation By Matching for Two and Three Way
Exchanges,” Transplantation, 81, 5, March 15, 2006, 773-782.
Roth, Alvin E., Tayfun Sönmez, M. Utku Ünver, Francis L.
Delmonico, and Susan L. Saidman, “Utilizing List Exchange
and Undirected Donation through “Chain” Paired Kidney
Donations,” American Journal of Transplantation, 6, 11,
November 2006, 2694-2705.
Rees, Michael A., Jonathan E. Kopke, Ronald P. Pelletier, Dorry L.
Segev, Matthew E. Rutter, Alfredo J. Fabrega, Jeffrey Rogers,
Oleh G. Pankewycz, Janet Hiller, Alvin E. Roth, Tuomas
Sandholm, Utku Ünver, and Robert A. Montgomery, “The First
Never-Ending Altruistic Donor Chain,” April, 2008.
Rees, Michael A., Alvin E. Roth, Tuomas Sandholm, M Utku Unver,
Ruthanne Hanto, and Francis L. Delmonico, “Designing a
54
National Kidney Exchange Program,” April, 2008.
Arguments for and against
monetary market for kidneys
Religious scholars:
• Pope John Paul II: organ donation is heroic, but objectifying
human organs is immoral
– (similar views in Protestant denominations)
• Jewish responsa (e.g. R. Shlomo Zalman Auerbach):
– Donating a kidney is allowed (pikuach nefesh)
– It isn’t required
– So it falls in the category of things for which money might be
accepted.
• Islamic Republic of Iran: compensating kidney donors is legal
• Economists
– Voluntary transactions between consenting adults improve welfare
– Unwanted consequences can be reduced by careful regulation of the
market.
55
Additional arguments related to
kidneys
• “crowding out” of altruistic giving
• Hippocratic oath (“first do no harm”)
– Nephrectomys aren’t the best part of the transaction,
and some surgeons who aren’t wild about them
already may feel reluctant to take part if the donor’s
interest is commercial.
• Coercion: Even in the absence of money,
transplant surgeons are eager to avoid
accepting organs from donors who may feel
coerced, e.g. by family pressure.
– Interestingly, Ghods and Savaj, 2006, express the
view that the availability of paid unrelated kidney
donors in Iran has reduced the coercion of unpaid
related donors.
56
Transactions between consenting
adults
• Test yourself for repugnance: are you
willing to contemplate carefully regulated,
sales of live:
• Kidneys?
• Eyes?
• Hearts?
57
Regulated Market for Kidneys?
Design might address coercion or slippery
slope concerns (but probably not
objectification objections…)
• Single buyer (UNOS?)
– At above the competitive price (i.e. so more
donors would be available than are required)?
•
•
•
•
•
Informed consent?
Long term health insurance?
Psychiatric exams?
Kidneys can’t be used as collateral?
Restrictions on foreign imports?
58
Causes of repugnance to kidney sales?
Representative Sample Survey (with Steve Leider)
• We wanted to find out a bit more about
– Who finds kidney sales repugnant?
– What is such repugnance correlated with?
• Approximately 40% of respondents find at least some
kinds of kidney sales repugnant and/or think they should
be illegal. (Sales by individuals to individuals arouse the
most repugnance.)
• Looking at individual variables, women, self-identified
social conservatives and religious evangelical
Protestants find kidney sales more repugnant that do
others.
– But these aren’t explanatory variables, they lose
significance when we regress on underlying attitudes59
Attitudes correlated with
repugnance to kidney sales:
• Repugnance to other “body” markets
predicts repugnance to kidney sales:
– Paying for blood
– Paying for cadavers for dissection in anatomy
classes
– Paying a surrogate mother
• Repugnance to excessive use of takeout
food and restaurants (by a family with
children)
60
Interpretation (?)
• Blood, cadavers, surrogate wombs:
repugnance about bringing body parts and
functions into the market.
• Takeout food: repugnance to purchasing
some services that families and
communities customarily produce for
themselves “for free”.
.61
• When Robin Young interviewed me on
NPR's show Here and Now, she
remembered "when the first MacDonalds
came to our neighborhood, my mother
treated it as some sort of heathen
place...Go somewhere else but home to
eat?"
62
Conclusions: Kidney transplants
• One way that the severe shortage of
transplantable kidneys might be solved is if
xenotransplants (e.g. pig kidneys) became
possible.
– But they presently face immunological barriers that
we don’t know how to surmount.
• Another way the shortage might be solved is
with a monetary market.
– But this also faces very real obstacles, in the form of
repugnance.
• I wouldn’t want to bet which barrier will fall first.
• In the meantime, we can bring to bear the tools
of market design to increase the number of
transplants (through kidney exchange, through
ways of managing the DD lists, donations, etc.) 63
“Repugnance” constraints in market design
• In some of the examples I’ve discussed,
“repugnance” or even “revulsion” is exactly
the right word for how some transactions
are or were once regarded.
• In others, a milder word would be more
apt: some transactions are seen as
– distasteful,
– inappropriate,
– unfair,
– undignified
– unprofessional.
64
‘Repugnance’ (broadly construed) as a constraint on
market design
• In Boston, one of the strategy proof mechanisms we
proposed for their new school choice procedure was
rejected because it would have allowed the "trading" of
sibling priorities, and the schools folks didn't think that
sounded right, sort of like trading your older child.
• In the NYC high school match, a key question revolved
around the fairness of different ways to randomize for
schools that don’t have preferences. Note that in public
school choice, money wouldn’t be acceptable for
allocating spaces, although it is in private schools.
• And in the gastroenterology match, the issues that
came up involved whether it would be unprofessional for
applicants to be allowed to renege on acceptances of
early, exploding offers (ultimately the gastro associations
did adopt policies that allow that, as we
recommended...:) (the situation is different in other
markets, e.g. law, early and regular college admissions,65
etc., cf. Niederle and Roth 2006)
• “Students are under no obligation to respond
to offers of financial support prior to April 15;
earlier deadlines for acceptance of such
offers violate the intent of this Resolution. In
those instances in which a student accepts
an offer before April 15, and subsequently
desires to withdraw that acceptance, the
student may submit in writing a resignation
of the appointment at any time through April
15.
66
Should people be able to change their minds
about early offers they have accepted?
• Not in neuropsychology (president of
professional organization):
• “I have said it once, and I will say it
again: Two wrongs do not make a right.
To state it another way: The end does
not justify the means. I will be strongly
opposed to any attempt at [a]… policy that
allows candidates to accept an offer
outside of the match, participate in the
match anyway, and then renege on their 67
earlier "acceptance".”
Opposite of Repugnance:
Protected transactions
• Home ownership in the US
– E.g. Federal bailout of Fanny Mae and Freddy
Mac (GSEs: Government Sponsored Entities)
• Small farmers
– Subsidies, price support
• Small fishing boats
– Daily limits on catch
• Marriage: monogamy between a man and a
woman?
– Marriage with bride price, dowry, polygamy, gay
marriage, prenuptial agreements
Conclusions: Repugnance
• Repugnance can be a real constraint. It can
change over time, but it can be persistent.
• Behavioral economics has mostly been
concerned with how individuals make choices.
But the manner in which attitudes towards the
appropriateness (or repugnance) of transactions
shapes whole markets (and therefore shapes
what choices people are confronted with) may
be one of the important ways that “behavioral”
considerations affect the economy.
69