The AMS Review, a journal of the American Marketing Society, has put together an issue on the theory of markets. When I was approached by Professor Hans Kjellberg to contribute a paper, I replied that I would rather engage in a dialog with one of the other proposed contributors, the great French economic sociologist Michel Callon. Professor Kjellberg conveyed that proposal to Professor Callon, and so it was that we corresponded by email, over a pandemic year and a half. Professor Kjellberg edited the emails to make an article of them, and also wrote an introduction. Here they are (still behind a paywall).
Kjellberg, H. Market expertise at work: introducing Alvin E. Roth and Michel Callon. AMS Rev (2021). https://doi.org/10.1007/s13162-021-00217-9
Callon, M., Roth, A.E. The design and performation of markets: a discussion. AMS Rev (2021). https://doi.org/10.1007/s13162-021-00216-w
"This discussion between Alvin Roth and Michel Callon is the result of a series of e-mail exchanges over the course of 18 months. It was triggered by an invitation extended to both authors to contribute to this special section of AMS Review on theories of markets. The discussion starts off with direct responses to the question put by Hans Kjellberg in his preceding commentary, which introduces the work of Roth and Callon, respectively. Then follows a discussion that touches upon, develops, and clarifies a number of issues related to the two authors’ respective positions on and approaches to markets and their organizing."
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Professor Kjellberg asked each of us to begin the exchange by answering the question "Why and how did you come to work on market design and the performativity of economics, respectively? "
Here are some paragraphs excerpted from the first and last paragraphs of my answer:
"I received my Ph.D. in Operations Research (OR) in 1974. (That "7" makes it sound as if it were a long time ago…) I studied game theory, and in those days, before game theory blossomed in economics, it seemed that it would find a natural home in OR. I’ve sometimes been asked how I switched from OR to ECON, and my answer is that I just stayed where I was as the disciplinary boundaries shifted around me.
"Even though market design (or marketplace design) wasn’t yet recognized as a part of economics, game theory was its natural starting place.
...
"I was privileged to be involved in the first kidney exchange between the United Arab Emirates and Israel in the summer of 2021 (della Cava, 2021; Roth, 2021). That exchange shows that kidney exchange, and markets more generally, can do more than save lives and promote health and welfare, and are not just the fruits of peace: they can also help make and solidify peace. (Perhaps Michel would say that peace is one of the social arrangements that promote markets, and well-designed markets are among the social arrangements that promote peace.)
"The Covid pandemic shed light on the fact that even when in normal times there is social support for using money as a primary way to allocate many scarce goods, in an emergency this social support can be strained. When masks, ventilators, and vaccines were in short supply, there was no widespread attempt to allocate them within countries primarily to those who could pay the most. That is, in emergencies it can be both operationally difficult and socially repugnant to rely on prices to allocate scarce goods, and so markets sometimes need to shift from their normal design to an emergency mode (Cramton et al., 2020). Thus after natural disasters, we often see rationing, price controls, subsidies and other temporary interventions.
"This should help us keep in mind that marketplaces are human artifacts: they are tools. When well designed to meet the needs of the larger environment in which they operate, they may work well, and when they are not, they may need to be redesigned. So, market design, and “design economics” more generally, can be thought of as the engineering part of game theory. Michel’s work on “performativity” in economics can help expand on this distinction between science and engineering.
"In short, market design, which is an ancient human activity, is naturally studied by economists, engineers, sociologists, and marketers, and is intimately involved with the human experience. I hope you can see why I couldn’t resist being drawn in."
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On related matters:
Professor Callon has a book newly translated into English:
Markets in the Making: Rethinking Competition, Goods, and Innovation, by Michel Callon, Translated by Olivia Custer, Edited by Martha Poon, Princeton University Press, Published (US): Dec 7, 2021.
Here's my blurb for the book:
"“In Markets in the Making, Michel Callon explains the unique view of markets he has distilled from his long career observing markets, in detail, from the perspective of an engineer-sociologist. In a book that will fascinate economists as well as sociologists, he introduces us to a new vocabulary to help us think about markets whose participants may be collectives, and whose infrastructure helps participants determine what they want, and calculate what they need.”—Alvin Roth, Nobel Memorial prize winner for economics and Craig and Susan McCaw Professor of Economics, Stanford University"
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And here are some of my other posts on sociology and economics from the point of view of performativity. Here's one of those that may have first planted the seed for my desire to correspond with Michel Callon, it's a link to a blog post of Jose Ossandon:
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