Alvin Roth and Lloyd Shapley were awarded the Nobel Prize in economics today “for the theory of stable allocations and the practice of market design.” Their contributions address a simple concern—how to match different agents effectively. In an effort to find a solution to this real-world problem, Shapley developed a matching algorithm with David Gale, and Roth later adopted it in his empirical work, applying it to problems including matching kidney donors and recipients. Kidney donors and recipients aren’t the only situation to which the algorithm applies, however.
In 2009, I summarized Shapley’s work in a Valentine’s Day article:
The revolutionary accomplishment of Gale and Shapley is that they proved that a simple algorithm could produce a stable set of matches that assign everyone a spouse. You might say that they proved with math that there is someone for everyone.
The algorithm, which was a purely theoretical construct, is simple and eerily reminiscent of historical social convention. Suppose that we put 10 men and 10 women, all heterosexual, in a room. The Gale-Shapley algorithm would assign their mates as follows: The men line up and, one by one, propose to their favorite woman. The women can either reject the proposal or defer it until the next round by becoming “engaged.” In the next round, each unengaged fellow tries again with his next favorite woman. A woman who was previously engaged can ditch her fiancé and become engaged to her new suitor if she wishes. The game continues until everyone is engaged, at which point, in cult-like fashion, everyone is married all at once.
Using the insights that were developed by the economic literature since their work, I conclude that Valentine’s Day has become a missed opportunity to signal interest and find the perfect partner. Sending out a few valentines can significantly improve the quality of matches, so even though February 14 is four months away, make sure you start planning now.
Congratulations to Professor Roth and Professor Shapley.