Nobel Prize for... Market Research

Two Americans have been awarded this year's Nobel prize for economics, for work on accurate matching of agents - for example students with schools or donors with needy patients - and the extension of this into the understanding of markets.

The award recognised Lloyd Shapley and Alvin Roth for helping to address 'a central economic problem' - how to accomplish such matching tasks as efficiently as possible - and how this could be tailored to specific groups / targets.

Shapley - born in 1923 in Cambridge, MA, and Professor Emeritus at UCLA, used co-operative game theory to study and compare different matching methods, and with colleagues developed the Gale-Shapley algorithm to ensure a 'stable' matching less likely to be manipulated by agents or leave them dissatisfied with the choice of match.

Roth, 28 years Shapley's junior and currently George Gund Professor of Economics and Business Administration at Harvard University and Harvard Business School, extended Shapley's ideas to help model the functioning of markets and market institutions. With colleagues, he developed practical means to redesign existing institutions in health and education sectors to improve matching, all based on the Gale-Shapley algorithm.

The awarding body said the work of the two had 'generated a flourishing field of research and improved the performance of many markets... an outstanding example of economic engineering.'

The prize of SEK 8m ($1.22m) is to be shared equally between the Laureates. Awarded by the Royal Swedish Academy of Sciences, the prize is not technically one of the five Nobel Prizes but is widely linked with them - see www.mrweb.com/countries/166sweden.htm for more information!

More details at www.nobelprize.org/nobel_prizes/economics/laureates/2012/# .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.