Who Gets What ― and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth

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"Who Gets What ― and Why: The New Economics of Matchmaking and Market Design" by Alvin E. Roth looks at market design and how it has changed throughout history and its role in matchmaking. Roth explains how the process of allocating resources has become a central part of economics, how markets and competition play a role in it, and how different types of institutions interface in the process of assigning resources.

Roth explains how a number of different matching mechanisms have been used throughout history to allocate jobs, organs, and other resources. He describes the design principles necessary to create a successful market and how these principles relate to the new economy.

The book begins with a look at historical matching models. For example, in the 18th century, Roth describes the “silent auction” model of matching job applicants and employers. This involved employers adding descriptions of the vacancies available and candidates would send in replies expressing their interest. The employers would then make their decisions based on the details given.

Roth then covers various subjects such as the use of auctions to identify the best price for goods, the role of congestion pricing in transportation management, and the growth of mechanism design as a field of study in economics. He also looks at how auction design has become a specialty in market design and how even the design of auctions can be used to direct a market in a certain way or to carry out certain outcomes.

The book also covers the emergence of market design as a distinct field in economics. Roth explains how traditional economic tools such as game theory and mechanism design can be used to analyze markets and align incentives properly. He also examines the concept of matching markets, which combine aspects of auction and matching models.

In the second part of the book, Roth looks at the impact of matching models in a variety of industries. He discusses how the matching model developed by the National Matching Service is used in the medical training field, to propose suitable matches for organ donors and recipients, and in job search markets for employers and applicants. He also looks at the medical professional matching markets in the United States, and how those markets have changed from an auction format to one of matching models.

Finally, Roth describes the role of information in market design. He explains how certain matching mechanisms can be used to produce efficient outcomes for participants in markets, even when clear information is not provided. He also explains how experimental economics and incentive compensation can be used to ensure that markets are well-designed.

Overall, "Who Gets What ― and Why: The New Economics of Matchmaking and Market Design" provides an excellent introduction to the subject of market design. Roth examines the history of how different markets have been designed and the impact of changes in labor markets and other markets on the economics of market design. He also looks at the role of matching models, auctions, and incentives in market design, and how a number of different types of institutions are involved in market design today. The book provides a good overview of the new economy and how it is impacting the way resources are allocated.