Friday, August 2, 2019

How Market Design Emerged from Game Theory, by Roth and Wilson in the JEP

This paper was quite fun to collaborate on, with my dissertation advisor Bob Wilson...

How Market Design Emerged from Game Theory: A Mutual Interview
Alvin E. Roth and Robert B. Wilson
Journal of Economic Perspectives—Volume 33, Number 3—Summer 2019—Pages 118–143

"We interview each other about how game theory and mechanism design evolved into practical market design. When we learned game theory, games were modeled either in terms of the strategies available to the players ("noncooperative games") or the outcomes attainable by coalitions ("cooperative games"), and these were viewed as models for different kinds of games. The model itself was viewed as a mathematical object that could be examined in its entirety. Market design, however, has come to view these models as complementary approaches for examining different ways marketplaces operate within their economic environment. Because that environment can be complex, there will be unobservable aspects of the game. Mathematical models themselves play a less heroic, stand-alone role in market design than in the theoretical mechanism design literature. Other kinds of investigation, communication, and persuasion are important in crafting a workable design and helping it to be adopted, implemented, maintained, and adapted."

It turns out that some people read footnotes .  I got the following welcome email from Charlie Nathanson at Northwestern, expanding on one of mine (in which I reflected on writing a paper with Bob):

"I was delighted to see your reference to the Talmud in your JEP article that came out today (footnote 22). There is a verse from Pirkei Avot about the student/teacher relationship that I did not see in your footnote or in your linked blog post. In case you haven't come across it, I wanted to share it with you. It's chapter 4, verse 12 (
רַבִּי אֶלְעָזָר בֶּן שַׁמּוּעַ אוֹמֵר, יְהִי כְבוֹד תַּלְמִידְךָ חָבִיב עָלֶיךָ כְּשֶׁלְּךָ, וּכְבוֹד חֲבֵרְךָ כְּמוֹרָא רַבְּךָ, וּמוֹרָא רַבְּךָ כְּמוֹרָא שָׁמָיִם:
Rabbi Elazar ben Shammua said: let the honor of your student be as dear to you as your own, and the honor of your colleague as the reverence for your teacher, and the reverence for your teacher as the reverence of heaven. 

Best wishes,

And here's the footnote that prompted that email:

22 A brief account of our subsequent teacher–student interactions, along with some other remembrances related  to  the  present  essay,  is  included  in  my  intellectual  autobiography  at  the  Nobel  Prize  website:   The   rabbinic   literature   does  not  overlook  teacher–student  relations.  In  the  Talmud,  for  example,  one  is  enjoined:  “Provide  for yourself a teacher and get yourself a friend ...” See my related blog post for more on this: The martial arts also value teacher–student relations, and I benefited from that too, as I describe at

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