057: Alvin Roth on Match-Making, Repugnant Markets and Market Design

Alvin Roth is the Craig and Susan McCaw Professor of Economics at Stanford University.

Professor Roth has made significant contributions to the fields of game theory, experimental economics and market design and is known for his emphasis on applying economic theory to solutions for “real-world” problems.

In 2012, Alvin won the Nobel Memorial Prize in Economic Sciences jointly with Lloyd Shapley “for the theory of stable allocations and the practice of market design.”

Alvin Roth has a B.S form Columbia University,  and earned his MS and Ph.D. from Stanford University.

Alvin’s latest book Who Gets What and Why: The New Economics of Matchmaking and Market Design is now available on Amazon.

Economics:

In this interview, Alvin mentions: money, barter, matching markets, supply, demand, price discovery, labor markets, marriage markets, market design, double coincidence of wants, property rights and game theory.

Economists:

In this interview, Alvin mentions: Gary Becker, Christien Exley, Lloyd Shapley, David Gayle, Herb Scarf, Hal R. Varian,  Preston McAfee, Fuhito Kojima, Muriel Niederle, Paul Milgrom, John Levin, Ilya Segal and Oskar Morgenstern.

In this episode you will learn:

• what economics is and if we need money to allow a market to operate efficiently.

• about the price discovery process in economics.

• what is match-making markets and how similar the labor market is to the dating market.

• what is market design and why it is important.

• how entrepreneurs and start-ups, like Airbnb and Uber, use market failure to solve a problem.

• what is a repugnant market.

• the difference between a thick and a thin market.

• what makes a market thick.

• about the black market for kidneys.

• how kidney exchange works.

• about the double coincidence of wants in the kidney exchange market.

• about the problem in the market for water in California.

• some of the unintended consequences from the war on drugs.

Books:

• Who Gets What and Why: The New Economics of Matchmaking and Market Design by Alvin Roth
• Thinking, Fast and Slow by Daniel Kahneman
• Theory of Games in Economic Behaviour by John von Neumann and Oskar Morgenstern

Papers:

• Gayle, D. and L. Shapley (1962). College Admissions and the Stability of Marriage, The American Mathematical Monthly, Vol. 69, No. 1, pp: 9 – 15.  
• Scarf, H. and L. Shapley. (1974). On Cores and Indivisibility. Journal of Mathematical Economics 1: 23-37.

Websites Mentioned in this Episode:

• Market Design: Alvin Roth’s blog
• Angel Flight: People Helping People in Need

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