Al Roth’s Pioneering Work In ‘Market Design’

Al Roth, expert in game theory, experimental economics, and market design, is all about getting economists more closely involved in resource allocation — especially the complicated cases where you can’t depend on pricing to help in matchmaking.

Roth is the George Gund Professor of Economics and Business Administration in the Department of Economics at Harvard University and in the Harvard Business School and one of the big names in the field of matching markets — building efficient systems that match, for instance, new doctors to their first hospital jobs out of medical school.

MIT’s Erik Brynjolfsson is a fan. Brynjolfsson writes at his blog: “In these markets, small changes in the ‘rules of the game’ can lead to big efficiency gains, and it’s not always obvious how to best make those changes. That’s where the kind of deep theory that Al does can have practical value.”

The Boston Globe profiled Roth and his work earlier this month, in a piece called “The Matchmaker”. The story looked at the way Roth is bringing economics into new corners of the real world:

Roth has emerged as a rare figure in the academic world: a theorist willing to dive into real-world problems and fix them. After helping the med students, he designed a better way to assign children to public schools — the system now used by both Boston and New York. He also helped invent a system for matching kidney donors with patients, dramatically increasing the number of donations that take place each year. More recently, he and one of his students have been talking with Teach for America about improving the system it uses to deploy volunteers around the country.

Academically speaking, Roth is a pioneer of so-called market design: finding situations where a market is failing — often, a place that most people wouldn’t even recognize as a market — and making it work better. Roth has influenced a cadre of young, energetic market designers, many of whom have taken up prominent positions at top universities. Inspired by Roth’s work, these rising economists are also setting their sights on real-world problems. Some are looking at dating websites; others are interested in how universities could do better at scheduling their students’ classes.