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Tuesday 23 October 2012

This year's Nobel economists have transplanted theory into good practice

Anthony J. Evans is Associate Professor of Economics at our London campus. Since 2011, he has been writing a weekly column for City AM, a free business paper you can pick up from our reception every day. If you aren't able to get your hands on one on a Tuesday - the day Anthony's column is published - you can always catch up online via City AM's archive.

In last week's column, Anthony discussed this year's winners of the Sveriges Riksbank Prize - also known as the Nobel Prize in Economics - Lloyd Shapley and Alvin Roth. Shapley and Roth have well publicised opinions on how we can best allocate kidneys to those in need of transplants, a topic Professor Evans covers in his classes for the Master in European Business.

"Kidney allocation is a complex and pressing issue. There are around 7,000 people in the UK who need a new kidney, but tragically fewer than 3,000 operations are conducted annually. My class helps students understand alternative allocation mechanisms. We talk about the pros and cons of relying on personal networks, a centrally-managed list of donors, or indeed an actual market.

Shapley was interested in exactly this kind of market – one where two sides of an exchange need to be matched. He developed an algorithm that resulted in non-arbitrary and stable outcomes. Roth built on this theoretical work to solve real word problems, like matching students with schools. This is the exciting field known as market design and it blends together game theory and experimental economics.

But these aren’t really markets..."

Read the full article via the City AM website.

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