Marketplaces, Markets, and Market Design (my Presidential address in the July AER)

Here is the paper that grew out of my Presidential address as I stepped down from the AEA presidency in January. It attempts to summarize my current views on market design.

Marketplaces, Markets, and Market Design

• Alvin E. Roth



AMERICAN ECONOMIC REVIEW
VOL. 108, NO. 7, JULY 2018
• (pp. 1609-58)

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(Complimentary)

• Article Information

Abstract

Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.

Citation

Roth, Alvin E. 2018. "Marketplaces, Markets, and Market Design." American Economic Review, 108 (7): 1609-58.DOI: 10.1257/aer.108.7.1609

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Here's the video of my delivery of a preliminary version of this longish paper as a (relatively) short (1 hour*) talk at the AEA meetings in January, 2018:
AEA Presidential Address - Marketplaces, Markets and Market Design
Alvin E. Roth, introduced by Olivier Blanchard
View Webcast
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*the video has adjustable speed. If you listen to it at 1x, you hear it as I presented it.  If you listen to it at .5x, you hear me as my students probably do, droning slowly on. If you listen to it at 1.6 or 2x, you might not be able to hear individual words, but you can enjoy the body language...