The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics

By Alvin E. Roth. 2002

996 citations recorded by the source corpus.

Economists have lately been called upon not only to analyze markets, but to design them. Market design involves a responsibility for detail, a need to deal with all of a market's complications, not just its principle features. Designers therefore cannot work only with the simple conceptual models used for theoretical insights into the general working of markets. Instead, market design calls for an engineering approach. Drawing primarily on the design of the entry level labor market for American doctors (the National Resident Matching Program), and of the auctions of radio spectrum conducted by the Federal Communications Commission, this paper makes the case that experimental and computational economics are natural complements to game theory in the work of design. The paper also argues that some of the challenges facing both markets involve dealing with related kinds of complementarities, and that this suggests an agenda for future theoretical research. Copyright The Econometric Society 2002.

Subfields: Economics and Econometrics, Management Science and Operations Research, Marketing

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Citations in the corpus

Beyond Good Intentions: Designing CSR Initiatives for Greater Social Impact (2020, background): “Development thus shares a common focus with other disciplines, such as medicine, architecture, and engineering: searching for alternative solutions and rigorously testing these alternatives (R. King, 2012; Roth, 2002).”
Reputation and Feedback Systems in Online Platform Markets (2016, background): “In this sense I very much advocate for the view expressed in Roth (2002) that market designers “cannot work only with the simple conceptual models used for theoretical insights into the general working of markets.”
The labor economics of paid crowdsourcing (2010, positive): “To borrow an analogy from the economist and market designer Al Roth, just as builders of suspension bridges must be informed by both the elegant theory of mechanics and the messy details of metallurgy and geology, builders of social systems must possess both a general theory of behavior and detailed”
Centralized Admissions for Engineering Colleges in India (2019, neutral): ““Market design involves a responsibility for detail, a need to deal with all of a market’s complications, not just its principal features” (Roth 2002, p. 1341).”
Is There a Market for Ideas (2010, neutral): “…by and large, have mostly developed independently of one another.1 The market design literature utilizes formal game-theoretic approaches to evaluate how the rules that govern exchange and allocation impact the efficiency of different market institutions (Roth, 2002, 2008; Myerson, 2008).”
How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation (2004, background): “See Buchan et al. (2002) for a cultural comparison of trust and trustworthiness.”
Higher Aspirations: An Agenda for Reforming European Universities. Bruegel Blueprint Series, Volume 5, July 2008 (2008, background): “For an account of extensive literature on these matters see Roth and Sotomayor (1992), Roth (2002), Abdulkadiroglu-Sönmez (2003).”
The New York City High School Match (2005, neutral): “Of course, adapting the mechanism to the regulations and customs of New York City schools involved departures from the simple algorithm (cf. Roth, 2002).”
School Choice: A Mechanism Design Approach (2003, positive): “Important examples include the design of FCC spectrum auctions [see John McMillan (1994); Peter Cramton (1995); R. Preston McAfee and McMillan (1996); Paul Milgrom (2000)] and the redesign of the American hospital-intern market [see Roth and Peranson (1999); Roth (2002)].”
Designing Matching Mechanisms under General Distributional Constraints (2015, background): “…and a general mechanism is important since they can contribute to the advance of practical market design (or “economic engineering”) as emphasized in the recent literature (see Roth (2002) and Milgrom (2009) for instance), by providing tools for organizing matching clearinghouses in practice.”