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Reactions to the Nobel in Economics Announcement

Oct 15, 2012 || OpenMarkets || No Comments

Alvin Roth and Lloyd Shapley. Illustration: Niklas Elmehed, Copyright: Nobel Media AB.

There’s lots of discussion today about economic matching theory and market design after Alvin Roth of Harvard University and Lloyd Shapley of UCLA won the Nobel prize in economics ”for the theory of stable allocations and the practice of market design,” according to the Nobel committee.

The Wall Street Journal described the theory as ”research into how to match different actors in given markets, such as job seekers with employers and patients with donated kidneys.”

In an interview the nobelprize.org today, Roth put it in his own words:

“Well, my prize is about matching and matching is the work that the economy does when deciding for instance which students go to which schools. If they have a choice – so high school students in some cities get matched through a choice system where they submit preferences and the schools have requirements or perhaps preferences also. And some decisions are made about who goes where. And that’s what matching is about. It’s about who gets what.”

Roth also wrote a response on his blog.

On the popular economics blog  Marginal Revolution, economist Alex Taborrok wrote a post further explaining matching theory.

The New York Times wrote about one of Shapley’s early designs of a matching market:

In a paper with David Gale in 1962, Mr. Shapley explained how individuals can be paired together in a stable match even when they disagree about what qualities make the right match. The paper focused on designing an ideal, perfectly stable marriage market: that is, how mates find one another in a fair way, so that no one who is already married would want (and be able) to break off and pair up with someone else who is already married.

If you missed any of the news today, the U.K.’s Guardian featured a live blog of the Nobel ceremony and some of the instant reactions.