Lloyd Shapley of UCLA and Alvin Roth of Stanford have been awarded the highest accolade that two numbers pushers could hope for — the Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the guy who invented dynamite.
And what was the signal contribution that merited such an honor over and above all other worthy contenders? Something called “the theory of stable allocations and the practice of market design.”
Shoot me now.
But wait! There are actually real-world applications for this otherwise soporific collection of syllables:
Shapley and Gale show that the college admissions market is similar to the market for marriage, in which men propose to women, and each individual has views about the potential partners but those opinions don’t perfectly match couples up in an obvious way. Assuming that all proposals come from men, Shapely and Gale showed that to obtain a stable result—one that cannot be improved upon by swapping—the women need to employ a process of “deferred acceptance.”
At first, each man proposes to his favorite woman. Some women will have multiple suitors and some will have none. Rather than accept their favorite proposal, the women need to reject their nonfavorite proposals and just pocket the strongest one without accepting it. Then the rejects can make a second proposal, and if any women find themselves liking their new offer better than the previously pocketed one they can switch their hold. Repeat the process enough times, and, Shapley and Gale proved, the algorithm will lead to a stable match.
If they say so.
Of course, by this standard, the late writer and film director Nora Ephron should have been awarded a Nobel years ago, as she had already discovered the formula for the perfect-match.
Shapley and Gale’s algorithm have other uses, of course: matching students with schools and patients with kidneys. Which is no small thing. So hurray for them.
But I hope to collect my own prize next year, once my paper “Hydraulic Macroeconomics and Buffer Theory in Calculating Precise al Dente Cooking Times” is published in a peer-reviewed journal. But given that I have no peers, that may prove difficult.