Latent variable models provide a powerful framework for incorporating and inferring unobserved factors in observational data. In causal inference, they help account for hidden factors influencing treatment or outcome, thereby addressing challenges posed by missing or unmeasured covariates. This paper proposes a new framework that integrates latent variable modeling into the double machine learning (DML) paradigm to enable robust causal effect estimation in the presence of such hidden factors. We consider two scenarios: one where a latent variable affects only the outcome, and another where it may influence both treatment and outcome. To ensure tractability, we incorporate latent variables only in the second stage of DML, separating representation learning from latent inference. We demonstrate the robustness and effectiveness of our method through extensive experiments on both synthetic and real-world datasets.

We study a practical two-sided matching problem of allocating children to daycare centers, which has significant social implications. We are cooperating with several municipalities in Japan and our goal is to devise a reliable and trustworthy clearing algorithm to deal with the problem. In this paper, we describe the design of our new algorithm that minimizes the number of unmatched children while ensuring stability. We evaluate our algorithm using real-life data sets, and experimental results demonstrate that our algorithm surpasses the commercial software that currently dominates the market in terms of both the number of matched children and the number of blocking coalitions (measuring stability). Our findings have been reported to local governments, and some are considering adopting our proposed algorithm in the near future, instead of the existing solution. Moreover, our model and algorithm have broader applicability to other important matching markets, such as hospital-doctor matching with couples and school choice with siblings.

In this paper, we study a daycare matching problem in Japan and report the design and implementation of a new centralized algorithm, which is going to be deployed in one municipality in the Tokyo metropolis. There are two features that make this market different from the classical hospital-doctor matching problem: i) some children are initially enrolled and prefer to be transferred to other daycare centers; ii) one family may be associated with two or more children and is allowed to submit preferences over combinations of daycare centers. We revisit some well-studied properties including individual rationality, non-wastefulness, as well as stability, and generalize them to this new setting. We design an algorithm based on integer programming (IP) that captures these properties and conduct experiments on five real-life data sets provided by three municipalities. Experimental results show that i) our algorithm performs at least as well as currently used methods in terms of numbers of matched children and blocking coalition; ii) we can find a stable outcome for all instances, although the existence of such an outcome is not guaranteed in theory.

Large and acute economic shocks such as the 2007-2009 financial crisis and the current COVID-19 infections rapidly change the economic environment. In such a situation, real-time analysis of regional heterogeneity of economic conditions using alternative data is essential. We take advantage of spatio-temporal granularity of alternative data and propose a Mixed-Frequency Aggregate Learning (MF-AGL) model that predicts economic indicators for the smaller areas in real-time. We apply the model for the real-world problem; prediction of the number of job applicants which is closely related to the unemployment rates. We find that the proposed model predicts (i) the regional heterogeneity of the labor market condition and (ii) the rapidly changing economic status. The model can be applied to various tasks, especially economic analysis.

Online dating platforms provide people with the opportunity to find a partner. Recommender systems in online dating platforms suggest one side of users to the other side of users. We discuss the potential interactions between reciprocal recommender systems (RRSs) and matching theory. We present our ongoing project to deploy a matching theory-based recommender system (MTRS) in a real-world online dating platform.

In display ad auctions of Real-Time Bidding (RTB), a typical Demand-Side Platform (DSP) bids based on the predicted probability of click and conversion right after an ad impression. Recent studies find such a strategy is suboptimal and propose a better bidding strategy named lift-based bidding. Lift-based bidding simply bids the price according to the lift effect of the ad impression and achieves maximization of target metrics such as sales. Despite its superiority, lift-based bidding has not yet been widely accepted in the avertising industry. For one reason, lift-based bidding is less profitable f or DSP providers under the current billing rule. Second, the practical usefulness of lift-based bidding is not widely understood in the online advertising industry due to the lack of a comprehensive investigation of its impact.We here propose a practically-implementable lift-based bidding system that perfectly fits the current billing rules. We conduct extensive experiments using a real-world advertising campaign and examine the performance under various settings. We find that lift-based bidding, especially unbiased lift-based bidding is most profitable for both DSP providers and advertisers. Our ablation study highlights that lift-based bidding has a good property for currently dominant first price auctions. The results will motivate the online advertising industry to consider lift-based advertising.