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Kidney Transplants as a Matching Market

Alvin Roth was the co-recipient of the 2012 economics Nobel Prize. He won the prize for his innovative strategy for the market for kidney donations. Before his system it was usually close friends and family members who were willing to donate a kidney to their loved ones, but in a lot of cases, they were not compatible and the matching would not work. The matching system that Roth put in place helps match willing kidney donors to people who need a kidney whom they would have never been connected to before. This algorithm was very successful and resulted in 4000 kidney transplants that would have never happened otherwise. Roth has also used market matching in some of his previous work as he designed an algorithm that matches med school graduates to hospitals.

In an interview with Quartz, Roth talks about other matching markets around us such as Uber, Airbnb and Tinder. He also talks about college admissions as matching markets between the colleges and the candidates and about love and marriage as a matching market between spouses. His point is that we are surrounded by various matching markets. Most markets that have some sort of demand and supply and where individuals have different valuations for different things can be set up as a matching market and result in an equilibrium where nobody can be better off by moving from the matching. In many cases, such as the kidney issue, it is imperative to think of the problem as a matching market and set up a system to best deal with it because it can literally save lifes.


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October 2018