> More people would be better off if you allowed swapping.
What makes you assume that?
What makes you assume that?
The judges are keeping them unhappy in the name of “fairness”, but is it fair that this exchange among willing individuals is forbidden?
This can be reduced to an argument against free trade, because scarcity makes things unfair to those who can’t engage in the trade, which in my opinion is absurd.
No, the definition of consensual trade is that they would think they were better off. That people know their exact preferences and calculate with ease whether a transaction brings them closer to those preferences is a charade.
> The judges are keeping them unhappy in the name of “fairness”, but is it fair that this exchange among willing individuals is forbidden?
If you only focus on the individual level, maybe. But it's at least plausible that preventing locally favorable actions can create globally superior conditions for everyone in aggregate. This is obvious and arguments that center on "two individuals engaging in consensual trade" are trying to distract from that fundamental aspect of reality, either knowingly or unknowingly.
How can two people being prevented to perform an exchange make things better globally? I don’t think that obvious at all. In fact allowing the exchange will make things better globally, by definition, because more people will be better off, while no one not engaging in the exchange will be worse off (unless you consider maybe envy).
The same possible dynamic with schools is, according to the article, one reason school trades aren't allowed. Strategizing traders could mimic interest in attending popular school X, but really intend to trade a school X place for their true preference later. Everyone who isn't strategizing that way is worse-off or no-better-off when the strategic behavior is allowed.
Note that more complex rules with more potential for strategizing don't just inconvenience individuals. More complex tax codes or regulatory codes, too, tend to disadvantage e.g. small businesses that can't afford legal teams to strategically take advantage of non-obvious consequences of the rules. The small businesses aren't "envious" that bigger ones have a higher laywer-to-engineer ratio. Small business employees aren't necessarily any more foolish than big-co employees, except in specific matters of legal interpretation and strategizing. They just want less exploitable rules so that facially-optimal and actually-optimal behaviors stay closer to each other.
That's true, but the existence of resellers signals that the band and the venue could have made more money by structuring their prices differently
It being valid in one instance does not justify it at every instance.
> How can two people being prevented to perform an exchange make things better globally? I don’t think that obvious at all.
It is an instance of an optimization problem. It is algorithmically true that there are instances of optimization problems where local strategies, e.g hill climbing or trade between individuals, can only find local optima. Since the real world is far more complicated than any particular optimization problem...
This does not even touch market failures such as externalities where exchange isn't even aware of all the interested parties involved.
Frankly, this whole business about trade being better than any other way of distributing resources is so naive it boggles the mind how it can be such a widespread meme. Except, of course, for the fact that millions of dollars of propaganda are pumped into it by institutions far larger than individuals who have an interest in individuals thinking they're playing the same game and it's the best game in town.
You follow with angry anti-market rethoric but you never explain how a number of people trading places in schools, according to their own interest, makes anything worse for those not involved in an exchange.
Your assertion that trade always implies that both parties are better off is just wrong, that's my only point. That you build an ideology around that premise is none of my business; I didn't propose any normative philosophy about trade.
> You follow with angry anti-market rethoric but you never explain how a number of people trading places in schools, according to their own interest, makes anything worse for those not involved in an exchange.
I just pointed out that the premise to your reasoning did not really hold. If the premise doesn't hold then your position might be justified, but it hasn't been justified. If you can't entertain the possibility that you're wrong, then I don't know what to say; perhaps peruse the other lines of reasoning that were considered in this submission's comments?
P.S. just because i'm dismissive doesn't mean i'm angry
I have never made such an assertion, I've only said that in this specific instance free trade would have made both parties come out better off (which is indisputable -- both students would then be in their preferred school!), and that the judge's rationalization for forbidding students to swap their lottery results can be extrapolated as an anti-free trade argument.
We can discuss whether free trade always leads to better outcomes if you want, but that is not the point I am making in this thread. But in this instance it clearly does.
On the other hand you never explain WHY you think what I'm saying is wrong. You mentioned local optima, but the exchange pushes the end result towards the global optimum! What does exchange have to be "aware of all the interested parties involved"? If it is consensual and mutually beneficial to the parties involved, why do other parties even matter?
You said my premise doesn't hold, but you never explained why do you think so. I can't accept that just because you say so.
Explain to me what is wrong in this reasoning:
1) We got each other's preferred school; 2) We swap schools; 3) Now two students are happier than they were before; the rest remains the same as they were. 4) Repeat this process for more pairs of students and each time two people will emerge happier than they were before the exchange.
How does that not lead to a better global outcome?
If you can trade, then the right strategy is to rank the most popular school first so that you can trade it for the school you actually want.
I've been to a presentation by the Amsterdam civil servants who set this up, and they have run lots of simulations with several systems, and also compared the actual outcome of the current system with that of the previous ones. While some of the requirements one might want are logically incompatible, the current system does satisfy the requirements that, as far as I can see, most Dutch people would find the most important. Whichever way you decide, it's a policy decision.
Besides, free trade is always regulated in order for the market to function well.
Lets not put Dutch policy in a pedestal: they have a retirement system that is so pervasive, that once you are 60, you earn more money by retiring than by continuing to work, and thus literally push the entire population to retire at the same age.
You don't get paid retirement money unless you are of retirement age. That is 68 at the moment, and increasing.
And then, you get the money regardless of whether you're still working (most people stop).
The other was it encourages strategizing in future lotteries as students will select spots that are 'good trading material' rather than their first choices which would undermine the whole system.
Why should the judges artificially devalue the lotteried objects, making everyone worse off on average?
Not if their swap implicitly makes everyone else worse off though; and this is precisely the claim that judges make, that you cannot simply isolate the effects of the swap without considering the global consequences of the state of the 'game', so to speak.
Not necessarily. Second-order global effects need to be considered as well.
Externalities — https://en.wikipedia.org/wiki/Externality
Instrumental rationality — https://en.wikipedia.org/wiki/Instrumental_and_value_rationa...
Cognitive biases of various flavors — https://en.wikipedia.org/wiki/Anchoring
My situation is exactly the same whether you traded your place or not. How can it possibly be worse?
And the global consequences, which seem to be the main concern here, has clearly improved, as more people are happier in their preferred schools.
Suppose that Alice inherently belongs to some identifiable Group A — based on IQ, artistic- or athletic ability, ethnicity, whatever — but she gets randomly assigned to a school where the majority of students belong to Group B. It's the other way around for Bob, who inherently belongs to Group B but is randomly assigned to a school where the majority of students belong to Group A.
Now suppose that Alice and Bob would each rather be in schools in which the majority consisted of "their own kind." And imagine that there are, say, 50,000 Alices and Bobs in the school district.
In that situation, allowing Alices and Bobs to swap schools at will could easily result in self-sorting that might legitimately be disfavored by the school district, the state government, etc. For example, the school district might well legitimately want students to experience school with a cross-section of students from other groups, not just with "their own kind."
Would you prevent Alice and Bob from experiencing schools that are perfect matches for their abilities? Shouldn’t this be their or their parents’ call?
People who don't engage in strategic ranking will on average be worse off than they were before.
If all people engage in strategic ranking, then it essentially imposes the 'search cost' of gaming the system optimally on all participants; this search cost may be much greater than the local benefit of swaps.
Also, some parents (e.g. the locals, the wealthy and connected) may be much better at doing strategic ranking then other parents, so it may inherently advantages certain groups over others.
I think there is legitimate debate over whether the local benefits to the few are more important than global objectives, but denying that there are shared objectives (e.g. 'fairness' and de-escalating local competition) that sometimes demand local sacrifices is silly.
I would be individually better off if I didn't have to pay taxes and not receive services, and yet we all recognize that if everyone could individually opt out of taxes, then the entire system would probably collapse.
And don't tell me that I had the rational choice to pay taxes: my tax obligation was put on me because of my citizenship and birth, which I did not enter in out of my free will.
You should also consider that if we got each others’ best preference, this is a sign of a broken system, because we could have clearly been assigned to our first choices in the first place. So in my view, the exchange should be allowed, and then the system fixed so that such situations are not possible.
> People who don't engage in strategic ranking will on average be worse off than they were before.
How? They will be in the same school regardless of other students switching or not. And even if you didn’t strategize, you might receive an offer for an exchange, so you could even end up just as well as someone who did strategize.
I don’t get where this idea that globally the students will be better off if exchanging places is forbidden. Some people will be better off by exchanging, others will be in the same position as they were before. It’s clear that globally the system will have gained from more people being at their preferred schools.
Your tax example doesn’t apply, because obviously if I stop paying taxes there will be less government resources available to get things done (although we could discuss whether giving money to the government is actually a good way to get things done). Switching schools is different because it only affects the two people involved.
> You should also consider that if we got each others’ best preference, this is a sign of a broken system, because we could have clearly been assigned to our first choices in the first place. So in my view, the exchange should be allowed, and then the system fixed so that such situations are not possible.
The thing is that matching systems have been studied for a long time and there is a very rich game theoretic literature that studies this both from a pure theory perspective (where we assume people's preferences are given), and also in real life (e.g. the doctor matching system in the US).
What you're demanding here is that the matching system is finds a stable matching, such that there are no trades that any pair of players would be willing to make.
This is an actual goal of most matching systems. The problem is that it conflicts with the goal of relieving participants from making strategizing choices[1] [2].
Not to get into the weeds to much, but you can see that in the classical stable marriage problem, where only men propose and women either accept or reject, the matching is only stable amongst the men: no man would be willing to switch his partner with another man, but there will (in general) be women who are willing to switch her partner with another woman.
The male-proposed stable matching is actually locally man-optimal and woman-pessimal, in the sense that any trade that a pair of women decide on would by definition make their current fiances worse off.
> How? They will be in the same school regardless of other students switching or not. And even if you didn’t strategize, you might receive an offer for an exchange, so you could even end up just as well as someone who did strategize.
In the sense that relative wellbeing matters to people in general. A system that provides half of people $1 and everyone else $10 makes people better in absolute terms, but worse off in relative terms, and that matters to people because access to many desirable goods in society depend on people's relative ranking.
This is a very well-understood effect and has been measured in different contexts, e.g. [3]
You are right that a person that does no strategizing may still receive an exchange offer, but it should be easy to show that in general, effective strategizing increases the probability of an exchange offer and the net quality of the school.
> I don’t get where this idea that globally the students will be better off if exchanging places is forbidden. Some people will be better off by exchanging, others will be in the same position as they were before. It’s clear that globally the system will have gained from more people being at their preferred schools.
I agree with you that exchanges increase welfare locally, and it would be nice to come up with a system that by definition come up with matches that are inherently stable to any pairwise trades, but as far as I'm aware there is no matching system that simultaneously does that and also effectively discourages strategic behavior (e.g. 'lying' about preferences). Game theory is full of proofs of the impossibility of simultaneously reaching 'obviously' desirable goals, e.g. [4].
Note that an equilibrium where consumers are honest about their preferences and then the 'matchmaker' can rely on those preferences is much simpler evaluate and optimize. This is why, for example, auctions are an effective way to find price—bids are generally close to 'honest' reflections of reservation prices.
As soon as broad strategic behavior comes into play, it's becomes much harder to determine whether your system is actually working well since the preferences no longer reflect what people really want.
A system where everyone is essentially masking their true preferences imposes obvious costs: everyone who doesn't strategize will be worse off relatively than those who do. Strategizing costs people time and energy. It also makes the matchmaker's job obviously harder, since the 'first step' would be to try to back out people's true preferences.
We can certainly argue about whether those costs are higher or lower than the cost of not sitting at a local optimum, but it seems unwise to simply deny that there is any tradeoff, or to completely ignore the fact that people care deeply about relative welfare as well as absolute welfare.
[1] https://arxiv.org/pdf/1511.00452.pdf
[2] https://arxiv.org/abs/1608.07575
[3] https://en.wikipedia.org/wiki/Ultimatum_game#Explanations
[4] https://en.wikipedia.org/wiki/Arrow%27s_impossibility_theore...
Consider the simple one-to-one matching case, between {A, B} to {1, 2}. A prefers 1, B prefers 2, but 1 prefers B and 2 prefers A.
No matter what assignment we come up with, either A/B will want to trade, or 1/2 will want to trade.
In your world, how do you solve this dynamic cyclicality?
I get the "relative well-being" argument, but honestly it doesn't change my mind. It seems to be an argument that puts jealousy in front of objective improvements. Extrapolating again, this is the dispute between those who think inequality is a problem in itself and those who think that as long as poverty is reduced, inequality doesn't matter.
I would be fine with a system that doesn't allow exchange as long as the situation described in the article wasn't allowed to happen (i.e. if there's a spot for me in my first preference, I won't be allocated to my second one).
I'll try to find time to read your references, thanks!
Depends on the case. Sometimes parents are the best judges — but parents, like all of us, focus on local maximization, in this case, "what's best for my kids," and not what's best for all kids. Sometimes it's globally better for Alice not to be able to have the absolute best thing for her, because of the risk that this would produce worse outcomes for Bob, Carol, Dave, etc.
Dr. Atul Gawande wrote in one of his books that obstetricians decided that their job was not to achieve the absolute local-maximum best outcome for every individual mother — and therefore to use forceps for difficult deliveries, vice C-section surgery — but instead their mission was to seek a global maximum, i.e., the safe delivery of millions of babies per year. (Apparently it's difficult to be sure that trainee physicians have the proper "feel" for handling forceps, which if mishandled can result in catastrophic injuries to baby and mother.)
So, the OB community redefined the standard of care for difficult births as the C-section, which is much easier to teach and monitor. This means that some individual mothers will have surgery that they could have avoided through the use of forceps. But that's considered less important than avoiding the risk of the damage that improper use of forceps can cause.
> Would you prevent Alice and Bob from experiencing schools that are perfect matches for their abilities? Shouldn’t this be their or their parents’ call?
Again this focuses too narrowly on the local maximum. Sometimes parents are in the best position to make the call. But sometimes we as a society insist that parental judgments stay within certain guard rails; that's why, for example, we have compulsory-education laws. (And it goes without saying that we don't assume the kids are the best judges.)
If you and I have each other’s first selection, then we should have been assigned them in the first place.
Schools are funded with public money, and getting into a good school should be equally achievable to everyone (regardless of the background of their parents). That's why swapping places was forbidden. It's about the system's integrity and the system's fairness, not about the individual outcomes.