A pair of American scholars who dedicated their careers to bringing people together were rewarded with a Nobel prize for economics, the Nobel committee said this morning. Alvin Roth, who teaches at Harvard and Stanford, and Lloyd Shapley, a professor emeritus at UCLA, were notified this morning that they had won the prize.
Mr. Roth and Mr. Shapley worked independently on cooperative game theory, tackling such subjects as why a price mechanism that helps match buyers and sellers for scarce resources such as diamonds doesn’t serve areas such as organ transplants, school admissions or dating services. In the 1960s Mr. Shapley, now 89, pioneered a process for creating “stable matches” by creating a speed-dating system in which the two sexes took turns selecting potential partners.
In the first round ten men and ten women ranked each other from the most to least desirable. Say the men picked first, and all proposed to the the few most desirable women; those most desirable women then selected men with whom they wished to be matched. The less desirable men remained unmatched, and the process continued from there. Thus, the Gale-Shapley algorithm aimed to create stable matches in which partners would not leave each other.
Mr. Roth brought the theory into medicine and education by using the matching algorithm to connect organ-transplant recipients with potential donors or prospective students with admissions officers at selective schools based on a ranking system.
“Lots and lots of people are represented by this prize,” Mr. Roth told Reuters. “I imagine I’ll be talking to some of them and it’s a good thing for many young people who work in the area of market design, which is the area my colleagues and I are trying to develop.”
The prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968 by the Swedish central bank.
The choice continues a trend where at least one American has won the prize every year since 2000. Last year Americans Thomas Sargent of NYU and Christopher Sims of Princeton University won for their work in cause and effect in macroeconomics.
Mr. Roth told Reuters he doesn’t yet know what he will do with the $1.2 million prize.