Lung Transplant Market Design
The exchange of organs for transplant patients is a market that does not involve the transfer of money. Although these markets do not have an exchange of money they can still be optimized. This optimization is called market design. Three economists, Haluk Ergin, Tayfun Sönmez and Utku Ünver, have devised an algorithm to find combinations of patients to donors that could benefit from lung lobe exchanges. This algorithm, when run through the current lung transplant populace in the United States, would double the number of lung lobe transplants that could be completed.
Lung lobe transplants are common for suffers of cystic fibrosis, who normally need two healthy lung lobes. A typical healthy person has five lung lobes, but could just as well function with four. If each parent of a child suffering from cystic fibrosis donates a lung lobe to the child, the child’s condition will likely drastically improve. However if the parents are not compatible, then it can become difficult to find a donor for the child. This is where the economists’ algorithm comes in. In a small example, if two children are suffering from the disease and are not compatible with their respective parents, but are compatible with the parents of the other child then both sets of parents could agree to donate to the child that they are compatible with and both children will receive transplants. In the algorithm, this same process is applied to much larger sets of patients and donors.
Although no money changes hands, this market design is very similar to finding market-clearing prices. Each buyer has a value for the lung lobe, while each seller has a price for the same lung lobe. In this case though, the value is qualitative and is equal to donating a lung lobe. The price is also qualitative and is equal to receiving a lung lobe for their child. In this market the parents of a child suffering from cystic fibrosis would be willing to “sell” their lung lobes in return for receiving two lung lobes that are compatible with their child. This price is market clearing as the supply of the lung lobes will match the demand.
http://www.economist.com/blogs/freeexchange/2014/09/lung-exchanges