Ocotber 16, 2012

Two American economists–Lloyd Stowell Shapley and Alvin E. Roth–yesterday were awarded the 2012 Sveriges Riksbank Prize in Economic Sciences, informally known as the Nobel Prize for economics.  The men received the award for their work in “matchmaking”–that is, matching up students with schools or donated organs with patients in need of a transplant. Their work allows matches to be the best possible for all the people in the pool.

The work of both economists involves game theory–a method of studying decision-making situations in which the choices of two or more individuals or groups influence one another. Shapley sought a way to match people in a group such that none of the individuals paired would prefer another partner to the one they were paired with. This problem in economics is known as the “Stable Marriage Problem.” When all of the people in the pool are paired with their best match, economists call this a “stable match.” Working with the late American economist David Gale, Shapley invented a mathematical formula–known as the Gale-Shapley algorithm–that allows economists to most efficiently match people in a group.

The mathematical formula can be used for practical applications, such as pairing a group of students as roommates or placing a group of medical students into hospital-residency programs. Building on Shapley’s work, Alvin E. Roth studied practical applications for these problems of matching. Perhaps the most interesting real-world use of Roth’s work has been in the field of organ transplantation.

Because humans have two kidneys, it is possible for someone to donate one to a relative or friend who needs a kidney transplant. However, the donor and the patient may not be compatible, which will cause the patient’s body to reject the donor kidney. This can lead to serious medical problems, even death. Roth founded the New England Program for Kidney Exchange in 2005. The program fosters paired exchanges of kidneys, meaning one incompatible donor gives a kidney to a stranger, while that patient’s donor donates a kidney to yet another patient. This has led to chains of donations with, for example, 10 donors and 10 patients all operated on at the same time. Each patient gets the kidney that is the best match in the chain.  More kidney transplants occur when these efficient systems of pairing are used.

Lloyd Stowell Shapley was born on June 2, 1923, in Cambridge, Massachusetts.  He completed his bachelor’s degree in 1948 at Harvard and received a Ph.D from Princeton in 1953.  He is currently a professor emeritus at the University of California, Los Angeles (UCLA).

Alvin Roth was born on Dec. 18, 1951, in New York City. He received his bachelor’s degree in a mathematical field known as operations research from Columbia University in 1971. He received his master’s and Ph.D. in the same field from Stanford University in 1973 and 1974, respectively. He is currently a visiting professor at Stanford University and the George Grund Professor of Economics and Business Administration at the Harvard Business School.