Match-making US scientists earn Nobel prize

Life-saving kidney exchange programmes and ways for schools to select students are just two practical applications of the market-matching theories for which US economists Alvin Roth and Lloyd Shapley won the Nobel prize for economics yesterday.

Pairing up employers with job seekers are other examples of how Roth, 60, and Shapley, 89, have separately applied game theory to daily life.

The Royal Swedish Academy of Sciences, which awards the 8m crown (€931,400m) prize, called their work an outstanding example of economic engineering.

Roth and other economists who study market design are essentially exploring how matching procedures can be improved to produce better results for all concerned.

Speaking to Reuters, Roth gave the example of Stanford, his alma mater, to which he recently returned after a long spell at Harvard.

Stanford competes for students with the likes of Harvard and Princeton, and who is admitted does not depend solely on price. Stanford keeps its tuition costs low enough to attract plenty of applicants and selects among them.

“So there is choice going on, on both sides. It’s a little like getting married. Taking a job is like this too,” Roth said.

“And it turns out that, to some extent, getting an organ for transplantation is a little like it. So there are a lot of things that you get in life that you can’t just choose. You also have to be chosen. And that’s what we study. We study matching.”

Roth, in a series of empirical studies, built on separate work much earlier by Shapley, an emeritus professor at the University of California, who had used game theory to compare various matching methods and make sure the matches were acceptable to all counterparts.

Roth, who was sleeping when Stockholm came on the phone and missed the first call to inform him of his prize, described his work as studying “courtship” of many kinds. “You can’t just have what you want; you also have to do some courtship and there is courtship on both sides and we study the marketplace processes by which those types of courtship are resolved.”

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established by Sweden’s central bank in 1968.