Michael Giberson

At the end of a post, The credit crisis and market design, at his Market Design blog, Al Roth parenthetically remarked that an anagram for MARKET DESIGN is NEGATED SMIRK.

While the body of the post offered substance worthy of reflection, this comment naturally sent me to the Internet Anagram Server to see what other anagrams might be available. Sneaking in an extra S by making DESIGN plural gets me the satisfying GATES MEND RISK, which might be seen as a market design approach to the tragedy of the commons.

(Other notable anagrams for MARKET DESIGN: a market designer might be the KINDEST GAMER; market design might minimize disease: MANGE SKIRTED; incentives for fewer questions: ASKING METRED; efficiency gains may be small: A SMIDGEN TREK; mathematical tool advice: NEED TRIG MASK. There are more, IT RANKED GEMS, and the anagram server reports there are 9004 others, but I’ll leave the sifting to the interested reader. After all, Roth has substantive comments worth considering.)

Roth writes:

The WSJ, in its Real Time Economics Blog and in a related story in their January 2 issue, raises some questions about how discussion of financial market regulation has turned into a discussion of market design (although that’s not exactly the way they put it). They recount the poor reception given to Raghuram G. Rajan’s 2005 presentation at the Fed’s Jackson Hole conference in honor of Alan Greenspan. Prof. Rajan noted that banks’ increased exposure to the securities markets would make them less able to serve as a source of credit in a crisis, and his concerns were, the story reports, met with disdain by those assembled. The blog summarizes the attitude at the time:

“The episode suggests one reason that the crisis went unchecked: A dangerous all-or-nothing orthodoxy had come to dominate the policy debate, where one was either for free markets or against them. “

The point of the market design movement, of course, is that markets aren’t either “free” or non-existent. A better description is that markets have rules, and some rules work better than others, and the goal of regulators and others who shape the rules should be to find rules that enable markets to work better.

Links in original, emphasis added.

For purposes of a general statement about market design I would not privilege regulators over other ‘rule shapers’, public and private, but in the context the special reference to regulators is appropriate.

(One more MARKET DESIGN anagram, without further comment: GRANDEST MIKE.)