Monday, March 26, 2012

Markets in Everything: Professional Line-Standing

The first three people in line last Friday for the Supreme Court hearing today. Professional line-standers?
Washington Express -- "Do you need to attend a congressional or judicial hearing but don't have the time to stand in line? Washington Express, a leader in DC area courier services, provides professional, competitively priced line-standing and seat holding services for congressional and judicial hearings.

Our rate for line standing is $40.00 per hour and Supreme Court line standing is $50 per hour. Washington Express has provided line-standing and seat-holding services for over 20 years, and in that time, we have developed significant expertise in all of the sometimes complex details of seat holding and linestanding."


From the National Journal article "Line-Sitters Endure Drizzle At Supreme Court":

"The line-sitters, including working poor and the homeless, make up more than two-thirds of the line. Some are professionals, but all have been asked by their employers not to talk to reporters, and never to admit to being paid to sit. Rumor has it they’re being paid between $5 and $13 per hour to endure the elements and leg cramps."

From the Washington Post article "Supreme Court and the business of waiting in line":

"When I went to the Supreme Court Friday afternoon, there were already eight people in line. And at least some of them do not plan to see the arguments themselves. 

Three told me that they were being paid to wait there, although declined to be identified. One said he was holding a spot for his boss, but would not speak to whether he was being compensated. And two wouldn’t say anything at all. Monica Hammond, who currently holds the 11th spot in line and is blogging about it, writes that “The line standers are working in shifts - usually about 6-8 hours.” On Saturday, she saw a scuffle between two line standing companies over who had which spots."


48 Comments:

At 3/26/2012 8:01 AM, Blogger Larry G said...

why not sell the tickets to the highest bidders and give the money to the homeless?

:-)

 
At 3/26/2012 8:52 AM, Blogger Gene Hayward said...

This comment has been removed by the author.

 
At 3/26/2012 9:31 AM, Blogger Jon Murphy said...

Interesting. A few weeks ago, we had a post about the homeless getting paid to be wi-fi hotspots, and now we have a story where some are getting paid to be line sitters. It seems like the dynamics of homelessness are changing (at least some of them). Can you believe there is a free market, one that emerged without any central planning, solution to homelessness?

 
At 3/26/2012 9:39 AM, Blogger morganovich said...

jon-

seems like a bit of a prisoner's dilemma though. if none of us do this, seats are free. but if you fear that i will, you are likely to do it yourself, and we all wind up paying.

you can argue that those willing to pay value the seats more and that they ought to get them, and i am by no means arguing that this practice needs to be stopped, but from a purely pareto optimal standpoint, this setup is a loser for those going.

they wind up paying (and having to pay) for that which was free. that's a prisoner's dilemma for you.

of course, we can try to define around that by placing value on the certainty of getting a good seat, and that may even be true, but this is a really interesting idea for a game theory experiment.

my old econ advisor (i did a lot in experimental econ and game theory and use to TA micro econ classes using it) would love this as an experiment.

 
At 3/26/2012 9:42 AM, Blogger Buddy R Pacifico said...

The people who get into to the court may well see the Supreme's punt on the healthcare debate. That would be a waste of funds paid to the professional line standers.

The Tax Anti-Injuction Act forbids challenges to a federal tax until after it assessed and paid.

 
At 3/26/2012 9:54 AM, Blogger Larry G said...

which is better for a scarce resource?

queuing lines (rationing) or free market pricing?

 
At 3/26/2012 9:55 AM, Blogger Jon Murphy said...

You make an interesting case, Morganovich (as always).

Let me put this to you: it depends on the demand.

Let's take two examples:

First, your favorite band is coming to town. You know tickets are going to be in high demand and you want to make sure you have a good seat to the show (they are your favorite band, after all). I would argue here that, in this case, it would make sense to have someone sit in line for you. You pay someone for two days (let's assume this is a really hot ticket) while you work (or whatever).

Another example, let's say you are a journalist. Your editor says "Morganovich, this health care case is the case of the century! I want you to be inside that courtroom for every second of the arguments." You know this could make or break your career. Knowing the courthouse has only so many seats available, and there are not tickets, would it not make sense to pay someone in this case too?

I am not trying to discount your argument. I am just not the biggest fan of game theory (simply because I have so much faith in prices to allocate resources).

I am wondering your thoughts on my argument.

 
At 3/26/2012 10:47 AM, Blogger morganovich said...

jon-

i think your 2 arguments are quite different.

regarding a concert, i think concert pricing should just be dynamic from the word go. you charge more for better seats and find a market clearing price. concerts could learn a great deal from airlines. no one ought to ever wait in line for concert tickets. if they do, then pricing was not set correctly.

the courthouse example is different because there are no tickets.

as i said before "of course, we can try to define around that by placing value on the certainty of getting a good seat, and that may even be true, but this is a really interesting idea for a game theory experiment."

certainly, being certain to get a seat may have value to me an if i value my time at > cost to pay a line sitter and the aggregate cost of a line sitter < my value of the seat, then if may be an optimal choice for me.

but my point is that my optimal choice will lead to a sub optimal overall outcome (we all pay for free seats). this is the defining characteristic of a prisoner's dilemma and what makes it so interesting. there are scenarios that lead to consistent market failures.

we all go free if we shut up, but if you rat me out, i am in real trouble unless i rat you out first. it comes down to trust.

if none of us pay line sitters, none of us have to, but if i suspect that you will, then i need to do so as well.

again, we need to try and assess the value to the certainty gained by having one vs the cost of doing so relative to the value of the seat and the effects on the market etc.

it creates some very interesting risk structures around just when you start paying someone to be in line. you want to be early enough to get a good seat, but, obviously, do not want to pay for several extra days when coming in later would be fine. there is a whole subset of game theory around decision optimization and trying to figure out when you have enough info/have talked to enough buyers/where an optimal buy point is and it's all risk aversion biased.

figuring out when to start paying a line sitter would be a very interesting experiment to run. (we used to use micro econ classes as test subjects) i'd love to set up a scenario with a variety of values given to 100 buyers for 80 seats and see how it plays out.

i'd be particularly interested in seeing how optimality varies based on the buyer/seat ratio and on the slope of the demand curve.

if users have very different values, it would likely lead to a very different outcome than if they all valued a seat equally. imagine developing a strategy to pay a line sitter for a seat you value at $100 when there are 100 people looking to get 80 seats.

it would be a jump ball unless you paid over $100.

however, if we add in a disutility for not getting a seat (say, losing your reporter job) then we could easily get a scenario where all those buying tickets paid more than they valued them for.

this is what makes game theory so fascinating to me.

 
At 3/26/2012 10:47 AM, Blogger morganovich said...

we also need to look at other ways of allocating tickets.

eg. what if the SC just gave out numbers that were the same as holding your place? then no one would have to pay a line sitter. of course, there might be a line to get numbers. but then, they could also be allocated by seniority or any of a number of other metrics and getting in would work like a southwest flight.

we might even make the case that the SC SHOULD charge for tickets and use a dynamic pricing model like a dutch auction. if attendees are going to wind up paying a line sitter anyway, why not sell them a ticket with a number instead?

the choice of structure will have a profound impact on the shape of who pays, how much, and in what currency.

this is why GT is so much fun.

i'm surprised to hear you do not like it. the point is not to subvert markets, but rather to test markets of different shapes.

its' about learning to make markets work better.

a market for madonna tickets that is first come first served will work profoundly differently than one run as a straight auction, a dutch auction, etc. allowing resale of tickets changes the game greatly as well.

i think it's overly simplistic to assume that "market" and "price action" always means the same thing.

 
At 3/26/2012 11:18 AM, Blogger Jon Murphy said...

As usual, I have said something different from what I mean.

I didn't mean to say that I dislike game theory, but rather that it's logic only works in certain situations, specifically in a cartel-type situation. I'm not convinced such a condition applies in this particular market.

I'd say your scenario, Morganovich, is more in line with an "arms race" as described by Richard Thaler than a Prisoner's Dilemma.

 
At 3/26/2012 12:27 PM, Blogger morganovich said...

jon-

the two are not mutually exclusive.

the arms race is set off BY a prisoners dilemma.

it's a classic prisoner's dilemma in that it's all trust based.

if you and i trust one another not to pay a line sitter, then we can both get in for free. such trust comes MUCH harder as you increase the number of participants, especially if they are competitive.

that drives the arms race, but you could easily eliminate it by eliminating the initial prisoner's dilemma though a different market shape (dutch auction) or possibly encourage it (straight auction) and profit.

or, you could st aside X number of good media seats and sell them, then open the rest on first come first served.

the easiest way out of PD is cementing trust, but in a situation like this, that seems like it would never happen.

 
At 3/26/2012 12:47 PM, Blogger Jon Murphy said...

Ah, I see your point now. Thank you. I must admit, I have only an elementary knowledge of game theory.

 
At 3/26/2012 1:18 PM, Blogger juandos said...

"why not sell the tickets to the highest bidders and give the money to the homeless?"...

Why waste that money on the homeless?

 
At 3/26/2012 2:05 PM, Blogger Larry G said...

forget the homeless then.. and just sell the tickets at auction and use the money to reduce the debt.

like that better?

the "homeless" thing is a pathetic ruse anyhow..right?

 
At 3/26/2012 2:07 PM, Blogger Jon Murphy said...

the "homeless" thing is a pathetic ruse anyhow..right?

Right. They're not homeless. They're urban nomads :-P

 
At 3/26/2012 2:11 PM, Blogger Larry G said...

urban nomads? no no. they windshield washing capitalists, right?

on in the suburbs.. they're median moguls...

:-)

 
At 3/26/2012 2:26 PM, Blogger Ron H. said...

morganovich: "the courthouse example is different because there are no tickets."

I'm not sure that makes a difference. In either case, you are interested in the certainty of having a seat. You might consider that person in line to be your ticket.

An enterprising stand-in-line service might start auctioning those tickets.

 
At 3/26/2012 2:26 PM, Blogger Jon Murphy said...

Wandering Entrepreneurs?

 
At 3/26/2012 2:33 PM, Blogger Ron H. said...

"why not sell the tickets to the highest bidders and give the money to the homeless?"

Why not sell those stand-in-line positions to the highest bidder, and pay those homeless to stand in line?

What is this "give" nonsense?

 
At 3/26/2012 2:35 PM, Blogger Jon Murphy said...

Why not sell those stand-in-line positions to the highest bidder, and pay those homeless to stand in line?

I think some of those in line are homeless, if I read the article correctly.

 
At 3/26/2012 2:44 PM, Blogger Ron H. said...

"which is better for a scarce resource?

queuing lines (rationing) or free market pricing?
"

Pricing indicates the actual market value of a unit of resource. Rationing doesn't, and doesn't differentiate among various levels of subjective want.

 
At 3/26/2012 2:55 PM, Blogger morganovich said...

ron-

it's different because of the goals of the venue.

a concert promoter has clear goals around revenue. the supreme court does not. they are giving it away.

it's rationing on a first come first served basis as opposed to price setting.

sure, a line guy can try to sell me a spot/ticket, but i still have the free option of just getting in line too.

concerts do not work that way.

 
At 3/26/2012 3:00 PM, Blogger Larry G said...

so...the SCOTUS is an "inappropriate" venue for free market principles?

 
At 3/26/2012 3:04 PM, Blogger Ron H. said...

Jon M: "I think some of those in line are homeless, if I read the article correctly."

Yes, I believe that's correct. I was objecting to Larry's notion that someone should auction tickets and give the money to the homeless.

It's so easy to suggest how someone else's money should be spent.

 
At 3/26/2012 3:20 PM, Blogger Ron H. said...

morganovich: "or, you could st aside X number of good media seats and sell them, then open the rest on first come first served."

Hmm. You've just created a market in press passes.

But, why should media get special treatment?

In fact when I think about it, assuming you are referring to the Supreme Court, I don't believe it's legal to reserve seats. They are all free on a first-come-first-served basis.

If you are referring to some other situation, please ignore what I've written above.

 
At 3/26/2012 3:33 PM, Blogger Ron H. said...

morganovich"it's different because of the goals of the venue.

a concert promoter has clear goals around revenue. the supreme court does not. they are giving it away.

it's rationing on a first come first served basis as opposed to price setting.
"

I'm seeing those spots on the sidewalk as the venue, and the stand-in-line service as the promoter.

Once you have a seat, the concert is then free.

"sure, a line guy can try to sell me a spot/ticket, but i still have the free option of just getting in line too."

Yes, but in this case, I have a feeling that SCOTUS event has been "sold out" to line guys.

 
At 3/26/2012 3:34 PM, Blogger juandos said...

"forget the homeless then.. and just sell the tickets at auction and use the money to reduce the debt.

like that better?
"...

Actually larry g what I was thinking is take that money from the auction and spend it on something to help drive the economy...

Even if its only a little bit of money spent on an object made in some Pacific rim country its money in circulation which over time begets more money...

 
At 3/26/2012 3:40 PM, Blogger Ron H. said...

"forget the homeless then.. and just sell the tickets at auction and use the money to reduce the debt.

like that better?
"

No, I don't. You are still directing other people's money.

Government activities such as a Supreme Court hearings are open and free to the public by law. It is the excess demand beyond capacity that creates a market for places in line.

None of this discussion is about government money, but that of private parties.

 
At 3/26/2012 3:45 PM, Blogger Ron H. said...

"so...the SCOTUS is an "inappropriate" venue for free market principles?"

SCOTUS hearings are open to anyone on a first-come-first-served basis.

Free market principles apply to places in line to get in, as there aren't enough of them to satisfy demand.

 
At 3/26/2012 4:00 PM, Blogger Mike said...

"SCOTUS hearings are open to anyone on a first-come-first-served basis.
Free market principles apply to places in line to get in, as there aren't enough of them to satisfy demand."

Comment from Larry proving that he can't comprehend the difference in 3...2...1...

 
At 3/26/2012 4:10 PM, Blogger Larry G said...

huh? okay... so if the govt is allocating a resource... then all bets are off on market principles, right?

so... what if the govt said that you could not pay for a line sitter and that whoever got the tickets had to stand in line personally?

okay?

 
At 3/26/2012 4:12 PM, Blogger Mike said...

Bang.

 
At 3/26/2012 4:14 PM, Blogger Jon Murphy said...

Wait a sec...can we please hit the reset button here? I'm a little lost.

What "resource" are we talking about allocating? The seat inside the courthouse or the spot in the line outside?

 
At 3/26/2012 4:17 PM, Blogger Larry G said...

the seat on the inside ... which are allocated to the first 60 people who line up to get a ticket.

correct?

they are "outside" only because of the administrative logistics that do not want them inside at the door to the courtroom.

but if they allowed it.. it would be the first 60 ...waiting at the door.

 
At 3/26/2012 4:21 PM, Blogger Jon Murphy said...

If we are talking about allocating the seats inside the courthouse, then probably the most efficient way to handle that problem would be to sell tickets, just like any venue. It seems to me, in that case, the line outside would be useless (unless you have to buy the tickets from the Supreme Court Box Office in person).

I know this would be a violation of the law, but in a purely hypothetical example, this seems like the best option to me.

 
At 3/26/2012 4:24 PM, Blogger Larry G said...

If I understand - the SCOTUs security folks have 60 tickets (per day) and they hand them out to the first 60 people standing in line.. and those 60 are allowed to give their tickets to others - including those who pay them to stand in line.

 
At 3/26/2012 4:27 PM, Blogger Jon Murphy said...

That is my understanding as well, Larry

 
At 3/26/2012 4:33 PM, Blogger Larry G said...

so what would keep someone from standing in line and selling their ticket to the highest bidder?

 
At 3/26/2012 4:37 PM, Blogger Ron H. said...

"so what would keep someone from standing in line and selling their ticket to the highest bidder?"

Nothing.

 
At 3/26/2012 4:44 PM, Blogger Mike said...

"so what would keep someone from standing in line and selling their ticket to the highest bidder?"

What's the difference? Presumably, the guys who wait in line are getting the most they can for their effort and ticket.

 
At 3/26/2012 4:53 PM, Blogger Larry G said...

so there is, in fact, a market in SCOTUS tickets, then.

online? ticketmaster?

:-)

 
At 3/26/2012 4:54 PM, Blogger Ron H. said...

Larry, the ticket becomes a scarce resource because there are fewer of them than are desired. Therefore a market develops, with those desiring tickets competing with each other by bidding for the number of tickets available.

"Bidding" doesn't necessarily mean bidding as at an auction, but it means offering to pay enough for something that is in short supply, to get some of what's available.

For 60 SC seats, you must be among the top 60 offers, or "bids" for position in line from those that have them.

A line guy, will guarantee you a position among the first 60 in line, for a price. You are, in effect, paying for the time you would have spent standing in line yourself.

Most of us have better uses for our time than standing in line, but a homeless guy may not, so it's a good deal for him and us. Everyone wins.

 
At 3/26/2012 5:15 PM, Blogger Larry G said...

ya... I got that part.

but what keeps the homeless guy from just selling to the highest bidder or for that matter getting in line for himself to personally sell the ticket?

seems like a cellphone and a twitter hashtag could reap big bucks.

 
At 3/26/2012 5:43 PM, Blogger Mike said...

The homeless guy is already doing that. If he could get $400/hour to stand in line, he'd charge $400 an hour to stand in line. I'd guess that, even though it's not illegal to scalp the tickets, the buyers and sellers have learned not to pay for the ticket but the "labor" as a PR move...selling government access only to those that can afford it doesn't look very good for anybody. In this case it's no different than having a part-time employee go down and pick up your tickets for you.

 
At 3/26/2012 6:17 PM, Blogger Ron H. said...

"but what keeps the homeless guy from just selling to the highest bidder or for that matter getting in line for himself to personally sell the ticket?"

If the homeless guy decides to stand inline for himself and sell the ticket, fine.

If he has agreed to work for someone else by standing in line to acquire a ticket for them, he can't just sell it to the highest bidder because the ticket isn't his.

It's the same reason the guy delivering your pizza can't just sell it to the highest bidder. It's not his to sell.

He could be charged with theft.

"seems like a cellphone and a
twitter hashtag could reap big bucks.
"

Yes, anyone could do it.

 
At 3/26/2012 6:32 PM, Blogger Ron H. said...

Mike: "...selling government access only to those that can afford it doesn't look very good for anybody."

Mike, the access is free. The time spent standing in line for a free ticket is being sold. Anyone can get in line for a ticket for themselves, but many would rather be doing something else, so they pay someone to do it for them.

In this case, it seems that activity provides income for people that other wise wouldn't have any, so it's all good.

Scalping tickets is a great example of free markets in action, and should be encouraged, in my view.

It's not clear where the popular disdain for scalpers comes from, but they are the very essence of free enterprise and free trade.

 
At 3/26/2012 6:47 PM, Blogger Mike said...

Ron,
I was talking about perception....that's why I said PR. There is nothing stopping anyone from simply scalping by traditional methods. There must be a reason why they don't just do it that way. Perception that access was being squeezed out by high bidders.... all I could come up with at first glance.

Paying somebody to stand in line instead of finding the price per ticket that people are willing to pay adds another layer of volatility.

 
At 3/26/2012 6:52 PM, Blogger Mike said...

"It's not clear where the popular disdain for scalpers comes from"

It comes from the fact that most people can't tell the difference between poor initial pricing and some kind of theft that only affects people who can't afford something at market price.

 

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