Two Business School Professors Receive Nobel Prize in Economics
Last week, a professor of economics and business administration at Harvard Business School (HBS) and a professor emeritus at the University of California at Los Angeles (UCLA) were named joint winners of the Nobel Prize in economic sciences. The two were awarded for their theoretical work in market matching and how it can be improved to create better matches, for example, between students and the schools want to attend and between organ donors and recipients.
Lloyd Shapley of UCLA developed a theory of “matching methods” for how to best to match people up in large groups. Together with colleague David Gale, he developed a process for ensuring that those matches are as stable as possible, which came to be known as the “Gale-Shapley algorithm.”
Years later, HBS’s Alvin Roth, now a visiting professor at Stanford, developed ways to apply Shapley’s theory to the admissions process for public schools in New York and Boston and used it to match compatible kidney donors with recipients for the New England Program for Kidney Exchange, which he co-founded.
“The combination of Shapley’s basic theory and Roth’s empirical investigations, experiments and practical design has generated a flourishing field of research and improved the performance of many markets,” the Nobel committee said in its announcement awarding what is formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
The two professors will share $1.2 million in prize money from the Royal Swedish Academy of Sciences.