Who Gets What - and Why: The New Economics of Matchmaking and Market Design
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Last annotated on April 5, 2017
1 Introduction: Every Market Tells a StoryRead more at location 32
Note: Sul mercato delle merci decidi cosa vuoi e verifichi se te lo puoi xmettere. Il problema del matching è inesistente, il prezzo risolve tutti i problemi... Quando il prezzo nn è tutto diventa importante l'immagine e il potere seduttivo x realizzare l'incontro cosicché entrano in gioco molte strategie opportuniste... Quando occorre un design artificiale? 1) quando il mercato naturale fallisce 2) quando il mercato naturale è ripugnante... Obiettivo: attenuare la ripugnanza conservando l'efficienza... Perché un mercato di matching è inefficiente: 1) quando si presenta in forma diluita cosicché chi sceglie non ha davanti a se tutte le alternative possibili, in questo modo rischia di perdere le occasioni migliori solo perché si sono presentate tardi 2) quando le alternative si congestionano e le migliori restano così occultate per quanto siano presenti... Un esempio dalla storia: la conquista del far west. Le terre furono assegnate col metodo: "chi prima arriva meglio alloggia". Un metodo inefficiente. Edit
Kidneys for transplantation are scarce. So is airspace: an airliner uses several hundred dollars per minute in fuel, and only one airplane can occupy a given block of airspace at a time. Passengers’ time is also costly. Who got which kidney, which operating room, and which flight path that day in April all required an allocation of scarce resources, so it is perhaps fitting that when Jerry is not flying a small plane, he is a professor of economics at Harvard.Read more at location 42
Matching sometimes is the gatekeeper of life itself, as when it determines which desperately ill patients receive scarce organs for transplant.Read more at location 61
Until recently, economists often passed quickly over matching and focused primarily on commodity markets, in which prices alone determine who gets what. In a commodity market, you decide what you want, and if you can afford it, you get it.Read more at location 65
When buying one hundred shares of AT&T on the New York Stock Exchange, you needn’t worry about whether the seller will pick you. You don’t have to submit an application or engage in any kind of courtship.Read more at location 66
Going to college can be costly, and not everyone can afford it. But that isn’t because colleges raise tuition until only as many students can afford to attend as the college can accommodate—that is, until demand equals supply. On the contrary, selective colleges, high priced as they are, try to keep the tuition low enough so that many students would like to attend, and then they admit a fraction of those who apply.Read more at location 70
A market involves matching whenever price isn’t the only determinant of who gets what.Read more at location 78
Kidney transplants cost a lot, but cash doesn’t decide who gets a kidney.Read more at location 79
Similarly, airport landing slots involve fees, but that isn’t what determines who gets them.Read more at location 79
Many people would find it repugnant to allow money to decide who gets a kidney or a seat in a sought-after public kindergarten. When there aren’t enough kidneys to go around (and there aren’t) or seats in the best public schools (there never are), scarce resources must be allocated by some kind of matching process.Read more at location 81
Sometimes a matching process, whether formal or ad hoc, evolves over time. But sometimes, especially recently, it is designed.Read more at location 84
Our work gives us new insights into what really makes “free markets” free to work properly.Read more at location 87
Markets differ from central planning because no one but the participants themselves determines who gets what. And marketplaces differ from anything-goes laissez-faire because participants enter the marketplace knowing that it has rules.Read more at location 89
Note: MERCATO: L ESITO DERIVA DALLE PREFERENZE. MERCATO: HA SEMPRE REGOLE MERCATO COME FONTE D ISPIRAZIONE Edit
The first task of a successful marketplace is bringing together many participants who want to transact, so they can seek out the best transactions. Having a lot of participants makes a market thick.Read more at location 107
Efforts to keep markets thick often concern the timing of transactions. When should offers be made? How long should they be left open?Read more at location 110
Congestion is a problem that marketplaces can face once they’ve achieved thickness.Read more at location 116
congestion has set in, and that can make it impossible for participants to identify the most promising alternatives the market has to offer.Read more at location 126
One thing that all markets challenge participants to do is to decide what they like.Read more at location 133
College admissions officers aren’t simply trying to pick the best students. They’re trying to pick the best students who will choose to attend if admittedRead more at location 136
Decisions that depend on what others are doing are called strategic decisions and are the concern of the branch of economics called game theory.Read more at location 142
Sometimes the goal of the market designer is to reduce the need to game the system, allowing choosers to concentrate on identifying their true needs and desires.Read more at location 146
A good marketplace makes participation safe and simple.Read more at location 147
the issue that led Boston Public Schools to invite my colleagues and me to help redesign the system for matching children to schools.Read more at location 151
Under Boston’s old system, parents had to strategize about which school they named as their first choice,Read more at location 151
Every market has a story to tell. Stories about market design often begin with failure—failure to provide thickness, to ease congestion, or to make participation safe and simple.Read more at location 155
market designers are like firefighters who come to the rescue when a market has failed and try to redesign a marketplace,Read more at location 156
But markets can succeed on their own practical terms and still fail in the eyes of those who don’t or won’t participate in them. Some markets are regarded as repugnant;Read more at location 158
economics has always had the fascination of gossip: it exposes intimate details of other people’s lives and choices.Read more at location 166
Avi commanded me to stick my finger deep into the flower of a sage plant. When I withdrew my finger, it had a line of pollen on the back. Avi then explained how this flower has evolved so that bees have to reach deep inside to get nectar, and thus only big bees with long tongues can get it. The pollen sticks to their backs, where it will be safely transmitted to the next flower they visit. The flower of this plant and bees have coevolved to take advantage of what each offers the other: The flower offers an especially rich source of nectar that can be harvested only by big bees. Big bees, therefore, have a reason to specialize in this kind of flower, which means that the pollen has a good chance of being delivered to another flower of the same species (which is the point of the flower, from the plant’s point of view). In this case, evolution has been the matchmaker.Read more at location 178
Much of what we’ve learned about market design—and from market design about markets more generally—has come from observing market failures and figuring out how to fix them.Read more at location 186
