Who Gets What—and Why by Alvin E. Roth
Nobel prize-winning economist Alvin E. Roth’s book Who Gets What – and Why: The New Economics of Matchmaking and Market Design opens in a new window is a thorough and accessible exploration of how we get the many things we choose in life that also must choose us. The author asserts that the various matchmaking processes through which these courtships take place—and how well we navigate those processes—determine some of the most important turning points in our lives.
Roth's informal writing style gives this book universal appeal, and he provides plenty of real-world examples non-economists can easily understand—including his own experiences designing new methodologies for high stakes matchmaking such as kidney donations, medical residencies, and public school options.
In Who Gets What—and Why, Roth contrasts matching markets or "matchmaking" with commodity markets where providers (sellers) and recipients (buyers) focus primarily on price. He asserts that in matching markets where participants need to choose each other, and where price is not the singular driver, the parties in a transaction need effective methods or technologies for clearly communicating their priorities and preferences.
Roth details the four ways matching markets fail: if they are too thin, if they are too congested, if they are perceived as unsafe, and if they are overly complicated. Gifted with the ability to describe theoretical economics in simple terms, Roth provides clear examples to explain concepts such as "stability" (an equilibrium where no pair could abandon the process and achieve a better outcome) and "deferred acceptance algorithm" (achieving equilibrium by creating incentive compatibility.)
Who Gets What—and Why makes a compelling argument that market designers serve as engineers—shaping markets to function optimally for the benefit of participants. This book is a must-read for anyone who wants to know more about the who, how, and why of successful matching.