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

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 mode...

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Bibliographic Details
Published in:Econometrica 2002-07, Vol.70 (4), p.1341-1378
Main Author: Roth, Alvin E.
Format: Article
Language:English
Subjects:
Algorithms
Applications
Applied sciences
Auction markets
Auctions
Bidding
Biology
Bridges
Clearinghouses
computational economics
Design
Design engineering
Designers
Doctors
Econometrics
Economic models
Economic theory
Economists
Electricity distribution
Engineering
Exact sciences and technology
Experimental economics
Game theory
History
Insurance, economics, finance
Labor market
Labor markets
Labour market
Market
market design
Market entry
Market mechanisms
Mathematics
Medicine
Operational research and scientific management
Operational research. Management science
Physicians
Physics
Probability and statistics
Sciences and techniques of general use
Spectrum allocation
Statistics
Studies
Surgery
U.S.A
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Summary: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.
ISSN:0012-9682
1468-0262
DOI:10.1111/1468-0262.00335