Alvin E. Roth > Quotes

“As with other kinds of markets, popular operating systems quickly get more and more popular, as they attract both new buyers and new sellers. In time, they become de facto industry standards—meaning they essentially establish a marketplace in which products (new applications) can be sold. Once this happens, they can, at least for a time, so completely dominate their markets that competing operating systems can’t attract enough users and developers to be anything but niche offerings.”
― Alvin E. Roth, Who Gets What ― and Why: The New Economics of Matchmaking and Market Design

“MAKING MARKETS SAFE is one of the oldest problems of market design, going back to well before the invention of agriculture, when hunters traded the ax heads and arrowheads that archaeologists today find thousands of miles from where they were made. More recently, one of the responsibilities of kings in medieval Europe was to provide safe passage to and from markets and fairs. For healthy commerce, buyers and sellers needed to be able to participate in these markets safely, without being waylaid and robbed (or worse) by highwaymen. Indeed, the word waylay captures the act of robbing travelers carrying money or valuables on their way to or from a market. Without some assurance of safe passage, these markets would have failed; they would have been too risky to attract many participants. And if the markets had failed, the kingdoms would have been deprived of the prosperity that markets, and the taxes on them, bring.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Faced with complicated choices like this, many parents understandably played it safe. About 80 percent of the children were assigned to the school that their parents had listed first. On paper, the system looked hugely successful, with most participants appearing to have received their first choices. But the reality was very different: many of those parents were simply getting safe, strategic choices.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Markets unravel despite the collective benefit of having a thick market in which lots of people are present at the same time, with many opportunities to be considered and compared. Without a good market design, individual participants may still find it profitable to go a little early and engage in a kind of claim jumping. That’s why self-control is not a solution: you can control only yourself, and if others jump ahead of you, it might be in your self-interest to respond in kind. These early movers become the equivalent of the Sooners in the Oklahoma Land Rush.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Even if you eat only a light breakfast, you likely benefit from the global reach of multiple markets.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“(Mutual interest is what separates courting couples from stalker and prey.)”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Turning a market into a commodity market helps make it really thick, because any buyer can buy from any seller, and any seller can sell to any buyer.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“But as Airbnb became huge, with lots of hosts and travelers, it became increasingly common to have to make multiple attempts to nail down a reservation. Meanwhile, Airbnb’s main competitors were no longer other small Internet businesses, but giant hotel corporations such as Hilton, Marriott, and Best Western. And one huge advantage these huge hotel chains offer to travelers is speedy confirmation. Their transactions are fast: by phone or on the Web, you can quickly find out whether rooms are still available and book one for the night you want. That’s because all the rooms in, say, a Hilton are managed by a central computer system, so one call lets you check all the rooms at the same time. Imagine instead if you had to call Hilton to inquire about each room individually. On any given call, the only thing the reservation clerk could tell you was whether, say, room 1226 at the San Francisco Hilton was available for the night you wanted. If not, you had to make another call to find out about room 1227, then another for room 1228. Booking a room with an Airbnb host was a little like that. So Airbnb had to figure out how a market with many hosts offering one room at a time could compete more effectively with hotels. Price was obviously important. But it was the spread of smartphones that helped Airbnb close the speed gap, and that may have mattered even more than price. Today, as hosts manage their reservations on their smartphones, they don’t have to wait until they return home to confirm a booking—they just check their phones. They can also, as soon as the room is booked, immediately update their Airbnb listing to remove its availability. That in turn makes it easier for a traveler searching for a room to find one that’s available, even though he or she still has to query one room at a time. Thus smartphones make the home hosting market work better not just because hosts can respond faster but also because they can update their bookings, which makes them more informative. This, too, reduces congestion (fewer rooms appear to be available, and a room that looks available is more likely to actually be so), and as a result helps travelers search more efficiently, with fewer time-wasting false leads.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“If you bought a copy of this book, you own it and can choose to keep it, sell it, give it away, or review it.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“How come? I think of this as an illustration of what I call “the Iron Law of Marriage,” which says that you can’t be happier than your spouse.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“the tension between commoditization and product differentiation — that is, between wanting to sell in a thick market to buyers even if they don’t care who you are, and trying to make your product special enough that many buyers will care enough about you to seek you out.”
― Alvin E. Roth, Who Gets What - And Why: The Hidden World of Matchmaking and Market Design

“and”
― Alvin E. Roth, Who Gets What - And Why: The Hidden World of Matchmaking and Market Design

“Clancy Goldfinger, former managing partner of Catchum, Killum, and Eatum, who graduated from Harvard Law School in 1951 and clerked for Judge XXX and Justice YYY, passed away Tuesday.”)”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Thus judges on the D.C. Circuit promptly moved the hiring of 2014 clerks before Labor Day. Judge Janice Rogers Brown, for example, was widely reported to have hired a clerk named Shon Hopwood in the first week of August 2013. Hopwood has an unusual personal history: before entering law school he served a lengthy prison sentence. But his early hiring quickly became quite usual. Clerks who wouldn’t begin work until 2015 were being hired in February 2014, a year and a half early.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Part of making a market thick involves finding a time at which lots of people will participate at the same time. But gaming the system when the system is “first come, first served” can mean contriving to be earlier than your competitors. That’s why, for example, the recruitment of college freshmen to join fraternities and sororities is called “rush.” Back in the late 1800s, fraternities were mostly social clubs for college seniors. But in an effort to get a little ahead of their competitors in recruiting, some started “rushing” to recruit earlier and earlier. Fast-forward to today, when it is first-semester students who are the targets of fraternity and sorority rush.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“market that can operate freely is like a wheel that can turn freely: it needs an axle and well-oiled bearings. How to provide that axle and keep those bearings well oiled is what market design is about.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Meanwhile, some private schools even enroll students at birth. At the Wetherby School in England, a school Princes William and Harry attended, the spaces reserved by newborns fill up early each month, and the school advises women scheduling cesarean sections to have them on the first of the month, if possible, to get a place before all the spots are gone.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“The only country in which it is legal to buy and sell kidneys from living donor/sellers is the Islamic Republic of Iran. Legal markets were permitted there after the need for kidneys spiked during the Iran-Iraq War.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Part of what makes credit cards work is that they simplify transactions for both buyers and sellers. Concentrating on just a few cards further simplifies matters on both sides of the market. Thus ever since the big shakeout, no new credit cards have joined the ranks of the majors; the barrier to market entry has proved to be too great. That said, in recent years the Internet revolution has opened the door to competition from wholly new directions—including new kinds of payment services, such as PayPal; an international network of automatic teller machines to challenge old standbys such as traveler’s checks; and maybe even new types of “virtual money” such as Bitcoin. As I write this in 2014, Apple has announced a new payment system on the latest iPhones, and we can reasonably expect that it and/or other new payment systems that make use of mobile devices will become commonplace.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Marriages among the Arunta were frequently arranged between two men, one of whom had just fathered a baby boy and the other a baby girl. When two such men met to arrange a marriage, however, the union they were arranging wasn’t between those two babies—it was much too late for that, because the baby girl’s marriage had already been arranged. Rather, the two fathers were agreeing that the baby boy would marry the first daughter of the baby girl. That is, they were agreeing that the infant girl would become the mother-in-law of the infant boy.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Another possible solution would be to think about kidney exchange in a global way. There is virtually no kidney transplantation, and little or no access to dialysis, in places such as Nigeria, Bangladesh, and Vietnam, where kidney failure is a death sentence. Presumably, many kidney patients there have willing donors, but in a country such as Nigeria, for example, where fewer than 150 transplants occurred from 2000 to 2010, that willingness doesn’t do patients any good. But suppose we were to offer them access to American hospitals, at no cost? That may sound expensive, but it wouldn’t have to be—indeed, it could be self-financing. Remember that removing an American patient from dialysis saves Medicare a quarter of a million dollars. That’s more than enough to finance two kidney transplants, as well as postsurgical care and medicines. That money could pay for an exchange between an American patient-donor pair and, say, a Nigerian pair.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Unfortunately, it’s hard to make rules constraining lawyers, because many lawyers earn their living by obeying the letter of the law while evading its intent.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Some restaurants have learned to use reservations to slow the flow of customers to cope with congestion in the kitchen, much as kidney exchange networks figured out how to organize nonsimultaneous chains to avoid operating room congestion. Mid-priced restaurants handle dining room congestion with waiting lines, and fast-food restaurants are fast not only because they prepare the food continuously, but also because they reduce each customer’s transaction to a single encounter, at the cash register.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“What often makes matching markets especially challenging is that everyone has to puzzle through not only their own desires but also those of everyone else and how all those other market participants might act to achieve their preferences.”
― Alvin E. Roth

“Building a better mousetrap isn’t always rewarded when the mice have a say in the matter”
― Alvin E. Roth, Who Gets What ― and Why: The New Economics of Matchmaking and Market Design

“In Israel, living kidney donors are now offered forty days’ pay at their current wage, even if they don’t miss that many days of work, and they are promised priority on the deceased-donor waiting list, in case they should ever need a transplant themselves.)”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“The thickness of the Amazon marketplace — the ready availability of so many buyers and sellers — is self-reinforcing.”
― Alvin E. Roth, Who Gets What - And Why: The Hidden World of Matchmaking and Market Design

“Before 2010, market news between Chicago and New York was transmitted fastest on cables that ran along the rights-of-way of roads and railways. But that year, a company called Spread Networks spent hundreds of millions of dollars to build a high-speed fiber-optic cable that went in a much straighter line and cut round-trip transmission of information and orders from 16 milliseconds to just 13. That 3-millisecond differential basically meant that only traders who used the new cable could make a profit by trading on momentary price differences between Chicago and New York.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“Signals such as high grades—or a peacock’s tail or big bank building—don’t indicate interest; they are marks of desirability. That is, the gaudy tail doesn’t signal how much the peacock is interested in a particular peahen; it signals how much the hens should be attracted to that particular cock.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design

“My son Aaron, who is a professor of computer science, encountered just such a careless signal when he was on the admissions committee at Carnegie Mellon University. One Ph.D. applicant submitted a passionate letter about why he wanted to study at CMU, writing that he regarded CMU as the best computer science department in the world, that the CMU faculty was best equipped to help him pursue his research interests, and so on. But the final sentence of the letter gave the game away: I will certainly attend CMU if adCMUted. It was proof that the applicant had merely taken the application letter he had written to MIT and done a search-and-replace with “CMU” . . . and hadn’t even taken the time to reread it! Had he done so, he would have noticed that every occurrence of those three letters had been replaced.”
― Alvin E. Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design