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What Have We Learned from Market Design?

Listed author(s):
  • AlvinE. Roth

This article discusses some things we have learned about markets, in the process of designing marketplaces to fix market failures. To work well, marketplaces have to provide "thickness", i.e. they need to attract a large enough proportion of the potential participants in the market; they have to overcome the "congestion" that thickness can bring, by making it possible to consider enough alternative transactions to arrive at good ones; and they need to make it "safe" and sufficiently simple to participate in the market, as opposed to transacting outside of the market, or having to engage in costly and risky strategic behaviour. I will draw on recent examples of market design ranging from labour markets for doctors and new economists, to kidney exchange, and school choice in New York City and Boston. Copyright © 2008 The Author(s).

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2007.02121.x
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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 118 (2008)
Issue (Month): 527 (03)
Pages: 285-310

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Handle: RePEc:ecj:econjl:v:118:y:2008:i:527:p:285-310
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  1. Roth,Alvin E. & Sotomayor,Marilda A. Oliveira, 1992. "Two-Sided Matching," Cambridge Books, Cambridge University Press, number 9780521437882, December.
  2. Roth, Alvin & Ockenfels, Axel & Ariely, Dan, 2005. "An Experimental Analysis of Ending Rules in Internet Auctions," Scholarly Articles 2579649, Harvard University Department of Economics.
  3. Alvin E. Roth & Tayfun Sönmez & M. Utku Ünver, 2004. "Pairwise Kidney Exchange," Game Theory and Information 0408001, EconWPA, revised 16 Feb 2005.
  4. Muriel Niederle, 2006. "Competitive Wages in a Match with Ordered Contracts," NBER Working Papers 12334, National Bureau of Economic Research, Inc.
  5. Tayfun Sönmez & Alvin E. Roth & M. Utku Ünver, 2007. "Efficient Kidney Exchange: Coincidence of Wants in Markets with Compatibility-Based Preferences," American Economic Review, American Economic Association, vol. 97(3), pages 828-851, June.
  6. Li, Hao & Rosen, Sherwin, 1998. "Unraveling in Matching Markets," American Economic Review, American Economic Association, vol. 88(3), pages 371-387, June.
  7. Crawford, Vincent P., 2005. "The Flexible-Salary Match: A Proposal to Increase the Salary Flexibility of the National Resident Matching Program," University of California at San Diego, Economics Working Paper Series qt2gw114b2, Department of Economics, UC San Diego.
  8. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
  9. Roth, Alvin E, 1991. "Game Theory as a Part of Empirical Economics," Economic Journal, Royal Economic Society, vol. 101(404), pages 107-114, January.
  10. Peter Cramton, 1997. "The FCC Spectrum Auctions: An Early Assessment," Papers of Peter Cramton 97jemsfcc, University of Maryland, Department of Economics - Peter Cramton, revised 12 Jul 1998.
  11. Ulrich Kamecke, 1993. "Wage Formation in a Centralized Matching Market," Discussion Paper Serie A 422, University of Bonn, Germany.
  12. Jonathan Levin & Jeremy Bulow, 2004. "Matching and Price Competition," Econometric Society 2004 North American Winter Meetings 350, Econometric Society.
  13. David S. Evans & Andrei Hagiu & Richard Schmalensee, 2006. "Invisible Engines: How Software Platforms Drive Innovation and Transform Industries," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262050854, September.
  14. Posner, Richard A. & Avery, Christopher & Jolls, Christine & Roth, Alvin, 2001. "The Market for Federal Judicial Law Clerks," Scholarly Articles 2623748, Harvard University Department of Economics.
  15. Roth, Alvin E. & Niederle, Muriel, 2003. "Unraveling reduces mobility in a labor market: Gastroenterology with and without a centralized match," Scholarly Articles 29408444, Harvard University Department of Economics.
  16. Atila Abdulkadiroglu & Yeon-Koo Che & Yosuke Yasuda, 2008. "Expanding "Choice" in School Choice," GRIPS Discussion Papers 08-17, National Graduate Institute for Policy Studies.
  17. Atila Abdulkadiroglu & Parag Pathak & Alvin E. Roth & Tayfun Sonmez, 2006. "Changing the Boston School Choice Mechanism," NBER Working Papers 11965, National Bureau of Economic Research, Inc.
  18. Jean Tirole & Jean-Charles Rochet, 2006. "Two-Sided Markets : A Progress Report," Post-Print hal-00173715, HAL.
  19. Sonmez, Tayfun, 1997. "Manipulation via Capacities in Two-Sided Matching Markets," Journal of Economic Theory, Elsevier, vol. 77(1), pages 197-204, November.
  20. Alvin E. Roth & Tayfun Sönmez & M. Utku Ünver, 2004. "Kidney Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 457-488.
  21. Atila Abdulkadiroğlu & Parag A. Pathak & Alvin E. Roth, 2005. "The New York City High School Match," American Economic Review, American Economic Association, vol. 95(2), pages 364-367, May.
  22. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford.
  23. Christopher Avery & Christine Jolls & Richard Posner & Alvin E. Roth, 2007. "The New Market for Federal Judicial Law Clerks," NBER Working Papers 13213, National Bureau of Economic Research, Inc.
  24. John H. Kagel & Alvin E. Roth, 2000. "The Dynamics of Reorganization in Matching Markets: A Laboratory Experiment Motivated by a Natural Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 115(1), pages 201-235.
  25. Roth, Alvin E., 1982. "Incentive compatibility in a market with indivisible goods," Economics Letters, Elsevier, vol. 9(2), pages 127-132.
  26. Gary S. Becker & Julio Jorge Elías, 2007. "Introducing Incentives in the Market for Live and Cadaveric Organ Donations," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 3-24, Summer.
  27. Alvin E. Roth & Tayfun Sönmez, 2005. "A Kidney Exchange Clearinghouse in New England," American Economic Review, American Economic Association, vol. 95(2), pages 376-380, May.
  28. John Cawley, 2001. "A Guide (and Advice) for Economists on the U. S. Junior Academic Job Market," Labor and Demography 0109001, EconWPA, revised 27 Sep 2001.
  29. Atila Abdulkadiroglu & Parag A. Pathak & Alvin E. Roth, 2009. "Strategy-Proofness versus Efficiency in Matching with Indifferences: Redesigning the NYC High School Match," American Economic Review, American Economic Association, vol. 99(5), pages 1954-1978, December.
  30. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521551847, December.
  31. Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
  32. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
  33. Roth, Alvin E, 1991. "A Natural Experiment in the Organization of Entry-Level Labor Markets: Regional Markets for New Physicians and Surgeons in the United Kingdom," American Economic Review, American Economic Association, vol. 81(3), pages 415-440, June.
  34. Alvin E Roth, 2007. "Deferred Acceptance Algorithms: History, Theory, Practice, and Open Questions," Levine's Bibliography 843644000000000283, UCLA Department of Economics.
  35. Guillaume Frechette & Alvin E. Roth & M. Utku Ünver, 2004. "Unraveling Yields Inefficient Matchings: Evidence from Post- Season College Football Bowls," Microeconomics 0404001, EconWPA, revised 24 Sep 2004.
  36. Alvin E. Roth, 2006. "Repugnance as a Constraint on Markets," Levine's Bibliography 321307000000000629, UCLA Department of Economics.
  37. Peter Cramton & Yoav Shoham & Richard Steinberg (ed.), 2006. "Combinatorial Auctions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033429, September.
  38. Alvin E Roth & Muriel Niederle, 2007. "Making Markets Thick: Designing Rules for Offers and Acceptances," Levine's Bibliography 843644000000000142, UCLA Department of Economics.
  39. Atila Abdulkadiroğlu & Parag A. Pathak & Alvin E. Roth & Tayfun Sönmez, 2005. "The Boston Public School Match," American Economic Review, American Economic Association, vol. 95(2), pages 368-371, May.
  40. Parag A. Pathak & Tayfun Sonmez, 2008. "Leveling the Playing Field: Sincere and Sophisticated Players in the Boston Mechanism," American Economic Review, American Economic Association, vol. 98(4), pages 1636-1652, September.
  41. Fuhito Kojima & Parag A. Pathak, 2009. "Incentives and Stability in Large Two-Sided Matching Markets," American Economic Review, American Economic Association, vol. 99(3), pages 608-627, June.
  42. Elliott Peranson & Alvin E. Roth, 1999. "The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design," American Economic Review, American Economic Association, vol. 89(4), pages 748-780, September.
  43. Fuhito Kojima, 2007. "Matching and Price Competition: Comment," American Economic Review, American Economic Association, vol. 97(3), pages 1027-1031, June.
  44. Muriel Niederle & Alvin E. Roth, 2005. "The Gastroenterology Fellowship Market: Should There Be a Match?," American Economic Review, American Economic Association, vol. 95(2), pages 372-375, May.
  45. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, September.
  46. Haluk Ergin & Tayfun Sönmez, 2005. "Games of School Choice under the Boston Mechanism," Boston College Working Papers in Economics 619, Boston College Department of Economics.
  47. Milgrom, Paul, 1998. "Putting auction theory to work : the simultaneous ascending auction," Policy Research Working Paper Series 1986, The World Bank.
  48. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
  49. Roth, Alvin E & Xing, Xiaolin, 1997. "Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 284-329, April.
  50. Hao Li & Wing Suen, 2000. "Risk Sharing, Sorting, and Early Contracting," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 1058-1087, October.
  51. Muriel Niederle & Alvin E. Roth, 2007. "The Effects of a Centralized Clearinghouse on Job Placement, Wages, and Hiring Practices," NBER Working Papers 13529, National Bureau of Economic Research, Inc.
  52. Charles R. Plott, 1997. "Laboratory Experimental Testbeds: Application to the PCS Auction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(3), pages 605-638, 09.
  53. Roth, Alvin E., 1985. "The college admissions problem is not equivalent to the marriage problem," Journal of Economic Theory, Elsevier, vol. 36(2), pages 277-288, August.
  54. Atila Abdulkadiroglu & Tayfun Sönmez, 2003. "School Choice: A Mechanism Design Approach," American Economic Review, American Economic Association, vol. 93(3), pages 729-747, June.
  55. Wing Suen, 2000. "A Competitive Theory of Equilibrium and Disequilibrium Unravelling in Two-Sided Matching," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 101-120, Spring.
  56. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  57. Roth, Alvin E., 1984. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Scholarly Articles 29410143, Harvard University Department of Economics.
  58. Roth, Alvin E. & Sonmez, Tayfun & Unver, Utku & Delmonico, Francis & Saidman, Susan L., 2014. "Utilizing List Exchange and Non-directed Donation through “Chain” Paired Kidney Donations," MPRA Paper 58246, University Library of Munich, Germany.
  59. Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, Econometric Society, vol. 70(4), pages 1341-1378, July.
  60. McKinney, C. Nicholas & Niederle, Muriel & Roth, Alvin, 2005. "The collapse of a medical labor clearinghouse (and why such failures are rare)," Scholarly Articles 2570404, Harvard University Department of Economics.
  61. Saidman, Susan L. & Roth, Alvin E. & Sonmez, Tayfun & Unver, M. Utku & Delmonico, Francis L., 2014. "Increasing the Opportunity of Live Kidney Donation by Matching for Two and Three Way Exchanges," MPRA Paper 58247, University Library of Munich, Germany.
  62. Bruno Biais & Pierre Hillion & Chester Spatt, 1999. "Price Discovery and Learning during the Preopening Period in the Paris Bourse," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1218-1248, December.
  63. Abdulkadiroglu, Atila & Sonmez, Tayfun, 1999. "House Allocation with Existing Tenants," Journal of Economic Theory, Elsevier, vol. 88(2), pages 233-260, October.
  64. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
  65. Kandel, Eugene & Rindi, Barbara & Bosetti, Luisella, 2012. "The effect of a closing call auction on market quality and trading strategies," Journal of Financial Intermediation, Elsevier, vol. 21(1), pages 23-49.
  66. Georgy Artemov, 2008. "Matching and price competition: would personalized prices help?," International Journal of Game Theory, Springer;Game Theory Society, vol. 36(3), pages 321-331, March.
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