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Two Americans awarded Nobel Prize for economics (+video)

A pair of economics professors will receive the 2012 Nobel Prize in economics for research in stable allocations.

The Nobel Prize committee announces the 2012 economics award.
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Americans Alvin Roth and Lloyd Shapley were awarded the Nobel economics prize on Monday for research that helps explain the market processes at work when doctors are assigned to hospitals, students to schools and human organs for transplant to recipients.

The Royal Swedish Academy of Sciences cited the two economists for "the theory of stable allocations and the practice of market design."

Roth, 60, is a professor at Harvard University in Boston. Shapley, 89, is a professor emeritus at University of California Los Angeles.

"This year's prize concerns a central economic problem: how to match different agents as well as possible," the academy said.

Shapley made early theoretical inroads into the subject, using game theory to analyze different matching methods in the 1950s and '60s. Together with U.S. economist David Gale, he examined "pairwise matching," by looking at how 10 women and 10 men could be coupled up, while respecting their individual preferences.

Roth took it further by applying it to the market for U.S. doctors in the '90s.

"Even though these two researchers worked independently of one another, 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 academy said.

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