How Market Design Emerged from Game Theory: A Mutual Interview
Journal of Economic Perspectives
vol. 33,
no. 3, Summer 2019
(pp. 118-43)
(Complimentary)
Abstract
We interview each other about how game theory and mechanism design evolved into practical market design. When we learned game theory, games were modeled either in terms of the strategies available to the players ("noncooperative games") or the outcomes attainable by coalitions ("cooperative games"), and these were viewed as models for different kinds of games. The model itself was viewed as a mathematical object that could be examined in its entirety. Market design, however, has come to view these models as complementary approaches for examining different ways marketplaces operate within their economic environment. Because that environment can be complex, there will be unobservable aspects of the game. Mathematical models themselves play a less heroic, stand-alone role in market design than in the theoretical mechanism design literature. Other kinds of investigation, communication, and persuasion are important in crafting a workable design and helping it to be adopted, implemented, maintained, and adapted.Citation
Roth, Alvin E., and Robert B. Wilson. 2019. "How Market Design Emerged from Game Theory: A Mutual Interview." Journal of Economic Perspectives, 33 (3): 118-43. DOI: 10.1257/jep.33.3.118Additional Materials
JEL Classification
- B31 History of Economic Thought: Individuals
- C70 Game Theory and Bargaining Theory: General
- D47 Market Design
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