Nobel Memorial Prize in Economics: 2012

Prepared by:

Joseph Malkevitch
Department of Mathematics and Computer Studies
York College (CUNY)
Jamaica, New York


web page:

The Nobel Memorial Prize in Economics (Nobel himself did not create a prize in Economics but a Prize was created in his memory in economics by the group that administers the Nobel Prize) was awarded in 2012 to Alvin Roth (on leave from Harvard at Stanford, age 60) and Llyod Shapley (emeritus from UCLA, age 89). Both of these men are mathematicians rather than trained economists, though Roth has taught for many years in economics department.

Shapley is noted for his work on solution concepts for cooperative games, and the concept he developed, the Shapley value is named for him. He also developed the Shapley-Shubik Power Index (with the economist Martin Shubik) which is one way to give the power of a player in a voting game, in particular in a weighted voting game such as the Electoral College used in the process of electing a President in the United States.

Roth is know for his work on two-sided markets, and ways to use algorithms related to the Gale-Shapley deferred acceptance algorithm to solve problems such as placing residents at hospitals, placing students at schools (school choice) and matching kidneys to people who need them.

It would be nice to think, that had he not died in 2008, perhaps David Gale, who in addition to the Gale-Shapley algorithm did other important work in Mathematical Economicis might too have been honored.

The prize tends to alternate between those who use mathematical methods to get insight into economic issues and those who use more descriptive methods. Other game theorists have won the Nobel Prize in the past.

While Shapley would ordinarily be regarded as a theoretical mathematician and Roth an applied mathematician, both have contributed to theory and applications, and I think, were well deserving of this recognition.

Here are some web based columns that appear as part of the American Mathematical Society Feature Column series that I prepared that treat some of the work done by Shapley and Roth.