Market design is about understanding the details of markets in sufficient detail so that we can help fix them when they are broken.
I've always been interested in using mathematics to make the world work better.
My Ph.D. is in operations research. I was interested in making things work better and using mathematics to help do that. So operations research is what I studied as an undergraduate and graduate student.
The simple model of a bridge is great, and you could not build a bridge without understanding it well. But if you're actually building the bridge, you need to know the site. A lot of economics is like that: When prices go up, demand is gonna go down. You can't forget that and run your economy. But it's not the only thing you need to know.
Maybe we could think of science as being like a nuclear chain reaction in which people and ideas bounce off each other, and if critical mass is reached, a new field is formed.
Some say economics has all kinds of good tools and techniques, but it has an absence of interesting problems. I look around the world, and I see all kinds of interesting, important problems we ought to solve with the tools we have.
Experimental economics is about conducting experiments: bringing economics into the laboratory or creating controlled conditions in the field that allow us to understand better what we are seeing in less controlled circumstances.
I moved to Harvard in 1998, and in 2000 the first kidney exchange in the United States was done at a hospital nearby. I started to think, 'Gee, there might be a way where I could help organize it, make it easier for people to find kidneys.'
A lot of people are surprised economists are assisting with kidney exchanges. Exchanges are what economists are good at.
Often people expect I have some touching personal story about kidney disease, but it's actually the mathematics that led me to it.
I gravitated to economics because I'm interested in how people coordinate and collaborate with each other. Economics studies all the ways people get along with each other.
When you're doing kidney transplants, you have to find out who can exchange kidneys with whom, doing blood tests to make sure it's true. You can't just work on the preliminary data. Then you have to organize the logistics.
In a paper called 'The Economics of Matching: Stability and Incentives,' I showed that there were not any mechanisms that would always both produce a stable matching and make it completely safe for all firms and workers to reveal their true preferences.
My opportunity to design school choice systems began in 2003 with a phone call from Jeremy Lack at the New York City Department of Education. He knew of my work on the medical match and wondered if similar efforts might help reorganize the dysfunctional, congested system then used to match students to high schools.
It turns out that a Nobel is also followed by other recognitions, and perhaps the most unexpected of these is that the Japan Karate Association in Tokyo has now made me an honorary 7th-degree black belt, something that, given my athletic abilities, is even more unimaginable than being an Economic Sciences Laureate.
I don't think I could have thought of any place other than Stanford to leave Harvard for.
