FYI: In “normal” markets, prices adjust to equate demand and supply; the market clears. This simple premise is at the core of economic thought. But with surprising frequency, prices are not enough and can even be irrelevant. These markets are broken in the sense that price adjustment won’t clear them, and economists have long struggled to understand efficient allocation in such cases.
Alvin Roth began studying these “broken” markets in the 1970s. Decades later, in 2012, this body of work was recognized with the Nobel prize. By extending theory developed by mathematician Lloyd Shapley, his Nobel co-recipient, Roth had “generated a flourishing field of research and improved the operation of many markets,” said the Nobel committee. “An outstanding example of economic engineering.”
Regards,
Ted
http://www.ritholtz.com/blog/2015/07/interview-with-stanford-economist-alvin-roth/print/
