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His address interested me enough to pick up the book and write this review.
A market "fails" or "unravels" when it becomes thin, congested, or unsafe. Thickening markets / Kidney exchange illustrates the features of a matching market as well as the benefits of market design. "Keep in mind," Roth writes, "that hospitals earn revenue on their transplants; they're commercial enterprises as well as caregivers." Thus hospitals have an incentive to keep their "easy-to-match" pairs off the market and refer the "hard-to-match" pairs to the market.Roth makes the world better by designing markets so that they work better. The problem with simultaneous operations is that they bump into resource constraints because of the limited availability of doctors, nurses, and facilities."Market design" is the set of rules according to which buyers and sellers interact; it is also the making of those rules. Last year, doctors at Yale-New Haven Hospital performed a nine-way cycle. In contrast to a trading cycle in which a donor expects a loved one to receive a kidney, a "non-directed donor" initiates a chain that will include "some patient-donor pairs, and end with a donation to someone on the waiting list." Another significant benefit of a chain is that transplants may occur non-simultaneously. A non-directed donor relaxes those constraints; he or she donates to Mr. Jones fails for some reason to reciprocate, no one has donated without a loved one receiving a kidney. Smith may remain in the kidney exchange as a donor to benefit his wife at some point in time.A market works well, in the jargon of market design, when it is "thick," "uncongested," and "safe." A market is thick if there are many buyers and sellers. The author shares the story of a non-directed donor who initiated a chain that involved 16 operations over a period of years.It is uncongested if buyers and sellers have enough time to evaluate offers. More recently, since publication of this book, Roth described a chain involving 60 donors and recipients.