A Conversation with Ali Hortaçsu
In every issue of The Bridge, we aim to introduce a member of our diaspora. These individuals touched the lives of many by their research, teaching or service activities. They are mentors who train the next generation of scientists, they are innovators whose innovations make our lives better, and they are teachers who educate hundreds of students. But they all have one thing in common; they make a difference.
Our guest on this issue of The Bridge is Ali Hortacsu, Ralph and Mary Otis Isham Professor of Economics, University of Chicago.
The Bridge : Could you please give us a brief summary of your background?
Ali Hortaçsu : I was born in Istanbul in 1974 and grew up near Boğaziçi University where my parents are (emeritus) professors of chemical engineering. I went to Robert College for secondary school, and attended Stanford University, where I got my B.S. and M.S. in Electrical Engineering and my Ph.D. in Economics. I joined the University of Chicago Department of Economics as an assistant professor in 2001. I am currently the Ralph and Mary Otis Isham Professor of Economics there.
T.B. : Could you also summarize your studies/research?
A. H. : Most of my research falls under the rubric of "market design." Most economists believe markets are a wonderful method of allocating scarce resources and facilitating exchange. However, we know of many conditions under which markets can fail miserably; especially when market participants have incentives to strategize around the stated rules of the marketplace. What is needed, then, is a well-thought out re-writing of the "rules of the game" that takes into account the fact that many market participants are highly rational, strategic actors who will understand and game the system. How should we go about designing such rules? There is now an elegant and extremely well established body of theoretical knowledge on this topic, starting e.g. with the work of my Nobel winning colleague Roger Myerson. What we have learned over time, however, is that theory does not always give sharp answers as to what to do; the specific parameters of the particular system we are analyzing matters a lot. What I have tried to advance in my research is a "data driven" approach to market design, in which we utilize very detailed data from existing markets, estimate the relevant parameters using econometric/statistical methods, and simulate the parametrized behavior under a slew of alternative market rules to arrive at improved market designs. My collaborators and I have utilized this framework to help guide the design of many real world markets, including electricity markets, financial markets, online auctions, and even Internet matchmaking sites. I am also happy to see the econometric and simulation methods I have developed being used in many exciting applications in this domain.
T.B. : Where do you see studies of your area of specialty in Turkey? What are your suggestions to improve the research in Turkey in this area?
A. H. : "Market design" has a long and distinguished history in Turkey, especially with the theoretical work of Murat Sertel, Ahmet Alkan, and Semih Koray. Tayfun Sönmez and Utku Ünver, who are also pioneers in this area, did much of their trailblazing research while they were colleagues at Koç University. Although the tradition of market design research is very strong in Turkey, I think improving collaborations between theoretical researchers and market operators would be very beneficial from both the applied and scientific point of views.
T.B. : Would you please tell us about the current status of collaboration between the US and Turkish research institutions in your field? What can be done to increase the collaboration and strengthen the bridge between Turkey and the US? And how can TASSA, in your opinion, contribute to it?
A. H. : There are some excellent market design conferences that take place in Turkey and Turkish universities steadily send very well trained students to U.S. Ph.D. programs. Again, I think market design is an area where Turkish economists have made giant strides, and the international reputation of Turkish researchers and research institutions is extremely high. I think what is missing are links between the academic community and public and private sector applications of the ideas. Forming these links would generate a lot of new ideas for young researchers, while making the Turkish economy more efficient!
T.B. : You have been mentoring many international scientists and scholars and also graduate students throughout your career. What would you advise young scientist for a successful scientific career?
A. H. : I've received and given much advice, but perhaps the most important piece of advice I've gotten is that "there are no dumb questions." The purpose of a life in science is to understand, and if you are not understanding something, you have to ask questions. Do not worry about appearing "dumb" or be intimidated by the person you are asking questions to: if you do not understand, just ask. You should also respect questions by others; if somebody is asking a question about your work, no matter how basic, it is your duty as a scientist to answer that question to the best of your ability. I have done some of my best work in response to "basic" questions from my students or non-economists.
T.B. : Could you please tell us about your life outside of your work? Do you have hobbies? What are your favorite activities? If you recommend a book, what would that be and why?
A. H. : My time outside of work is almost exclusively devoted to my family. A wonderful aspect of being an academic is that you are invited to conferences all around the world and you have friends and colleagues almost everywhere you go, so we take advantage of this and travel quite a bit as a family. As for books, this is a bit self-serving, but "Freakonomics" by my colleague Steve Levitt remains a favorite. Even some of the smartest people I meet often have a hard time distinguishing between "correlation vs. causation" when interpreting economic or sociological data. Steve provides wonderful examples of how challenging "causal interpretation" can be in social scientific settings, and how one can try to test "causal" hypotheses using such data.