A pioneer in the field of market design, Harvard Business School professor Alvin E. Roth has helped to repair flawed market systems in fields ranging from kidney donation to high-school student placement. Key concepts include:
* Successful marketplaces must be “thick, uncongested, and safe.”
* Sufficient “thickness” means there are enough participants in the market to make it thrive.
* “Congestion” is what can happen when markets get too thick too fast: there are heaps of potential players, but not enough time for transactions to be made, accepted, or rejected effectively.
* “Safety” refers to an environment in which all parties feel secure enough to make decisions based on their best interests, rather than attempts to game a flawed system.
Authors: Alvin E. Roth, Carmen Nobel
Source: Harvard Business School (HBS) Working Knowledge