Life-saving kidney exchange programmes are just one of the practical applications of the market-matching theories for which American economists Alvin Roth and Lloyd Shapley won the 2012 Nobel prize for economics on Monday.
Pairing students with schools and employers with job seekers — for instance doctors and lawyers taking up their first appointments - are among 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 eight million crown ($1.2 million) prize, called their work an outstanding example of economic engineering.
Tore Ellingsen, a Nobel committee member and a professor at the Stockholm School of Economics, said the central question when resources are scarce is who gets what. “Which worker gets which job? Which student gets to go to which school? Which patient gets access to which transplantable organ. Matching theory explains how outcomes depend on the chosen matching procedure,” Ellingsen said.
The award citation said Shapley, an emeritus professor at the University of California Los Angeles, had used game theory to compare various matching methods and make sure the matches were acceptable to all counterparts.
Roth followed up on Shapley’s results in a series of empirical studies.
“I am sure when I go to class this morning, my students will pay more attention,” Roth, who teaches at Stanford and Harvard, told a news conference by telephone from California.