Two US Economic Academicians - Alvin E. Roth from Harvard University, Cambridge, and Lloyd S. Shapley from University of California, Los Angeles have been selected for Nobel Prize winners in Economics category for year 2012 for giving the theory "stable allocations and the practice of market design".
The Royal Swedish Academy of Sciences, which announces the Nobel Prize every year on Monday has decided to award 'The Sveriges Riksbank Prize in Economic Sciences' for 2012 to two US Economists who gave the stable allocation theory.
"This year's Prize concerns a central economic problem: how to match different agents as well as possible. For example, students have to be matched with schools, and donors of human organs with patients in need of a transplant. How can such matching be accomplished as efficiently as possible? What methods are beneficial to what groups?" said Royal Swedish Academy in its press release on Monday.
"The prize rewards two scholars who have answered these questions on a journey from abstract theory on stable allocations to practical design of market institutions," it added.
Lloyd Shapley used so-called cooperative game theory to study and compare different matching methods. He was able to show how the specific design of a method may systematically benefit one or the other side of the market.
Shapley and his colleagues derived specific methods – in particular, the so-called Gale-Shapley algorithm – that always ensure a stable matching. These methods also limit agents' motives for manipulating the matching process. He also helped redesign existing institutions for matching new doctors with hospitals, students with schools, and organ donors with patients. These reforms are all based on the Gale-Shapley algorithm.
'Even though these two researchers worked independently of one another, the combination of Shapley's basic theory and Roth's empirical investigations, experiments and practical design has generated a flourishing field of research and improved the performance of many markets,' the award agency stated.
'This year's prize is awarded for an outstanding example of economic engineering,' it added.
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Comments:
Chris Bus
October 17, 2012 at 12:47 AM
Alvin Roth is currently lives in Menlo Park, California , teaching at Stanford and started transitioning from Harvard to Stanford to be full time faculty at Stanford starting 2013. So, please correct your information accordingly.