Two Americans took the Nobel prize for economics this morning.
Alvin E. Roth, of Harvard University, and Lloyd S. Shapley, of University of California, Los Angeles, were given the award "for the theory of stable allocations and the practice of market design."
If that doesn't mean anything to you, the Nobel committee explained that their work essentially explained an important economic problem: How can different economic actors find each other.
They explain:
"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? 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."
Roth and Shapley worked separately, the committee explained, but "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 two will split the $1.2 million prize, which is officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
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