Sunday, February 6, 2022

Interview on market design (in Polish)

I was interviewed by Sebastian Stodolak about market design and repugnance, in the Polish journal https://www.dziennik.pl/tagi/alvin-e-roth. Aside from being in Polish, it's behind a paywall. 

But here's an excerpt on which Google Translate works moderately well (without however giving you the feeling that the original discussion was in English...):

Prohibited activities. They repel, they don't disappear (Zakazane działalności. Odpychają, nie znikają)

"DGP: You design markets. What does that even mean? 

Alvin E. Roth: It's nothing new. People have always designed markets. They must already have been doing this in order to be able to trade stone tools over long distances. For example, they had to agree on the terms of this trade.

And that was designing?

In some sense. Without the design of appropriate rules, banking, auction systems or exchanges that were created during transactions carried out in an informal atmosphere in coffee shops in London or New York would not have been born.

It's just that most of the time people were doing fine without economists, and suddenly you show up with your friends and you even get a Noble for it!

It took a long time for economists to recognize the importance of design. For a long time they thought about markets in a very abstract way, aggregates, they talked about supply, about demand. This was the case until game theorists such as William Vickrey and the recent Nobel Prize winners Paul Milgrom and Bob Wilson appeared in economics. It was only when we started to look more closely at the rules on which the market game takes place that we saw that markets are project-based and how these projects define their functioning.

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