It’s no longer “Priceless”
MasterCard advertises on the concept of “pricelessness” and have generated billions of dollars in revenue. It seems odd for the company to emphasize what you cannot buy with money to encourage customers to buy more with money, but it works. How can this be? If you are to buy or sell a kidney in a legitimate market, there is no price for that. Alvin Roth Lloyd Shapley tackled this idea of matching “priceless” materials with the market and were awarded the Nobel Prize earlier this month.
Economic markets are driven by supply and demand—not money. For example, universities in America do not admit students based on their ability to pay their tuition. Admission process is rather based on complex scores based on grades, essay and other application materials. Transactions involving money are not necessary bound to the price, but price represents balance so that welfare is maximized. Price does, however, make it easier for the economists to judge whether welfare is maximized. The two Nobel Prize winners have put together something that help us understand more about matching “priceless” materials. They analyzed matching algorithms for “priceless” materials within a market.
Today’s economic markets are driven by data collected online. The amount of data being collected is huge and is growing at exponential rate. These data are being used to analyze behaviors of matching markets, which can ultimately become tools to device such algorithm that can match “priceless” materials within a market. Applications for these algorithms are infinite. For example, we could use such algorithm to match emotions, college admissions and other “priceless things.”