Figuring out what the Nobel prize winners for economics actually did

I know, it may seem incomprehensible, but UCLA economist Lloyd Shapley and Harvard's Alvin Roth were recognized for their work on market design and matching theory, which is basically the process by which selections are made in markets that don't have prices - or at least have strict constraints on prices. This is breakthrough stuff because prices are the linchpin of classical economics. Alex Tabarrok offers a primer:

Here is how it works, applied to men and women and marriage (n.b. the algorithm is also good for gay marriage but it's a little easier to explain with men and women). Each man proposes to his first ranked choice. Each woman rejects any unacceptable proposals but defers accepting her remaining suitors. Each rejected man proposes to his second ranked choice. Each woman now rejects again any unacceptable proposals, which may include previous suitors who have now become unacceptable. The process repeats until no further proposals are made; each woman then accepts her most preferred suitors and the matches are made. A similar process works when proposal receivers may accept more than one suitor, not that useful for marriage in most of the United States but very useful for when students are applying to schools and each school accepts many students.

Roth, working independently from Shapley, is known for tackling an intricate system that assigns kidney donation swaps. From the NYT:

For example, a husband in Boston may need a kidney, and his wife is willing to donate one of hers but she is not a match. Across the country there is a couple in the same position, and it turns out that the wives are a match for the husbands in the opposite couple. In this simple case, the two couples essentially barter their kidneys: wife A gives her kidney to husband B, and wife B gives her kidney to husband A. Two patients who might not have otherwise found a generous donor are saved. It is rare that two couples will serendipitously match each other's kidney donation needs this way, and there are often more pairs of donor-recipients involved. The longest chain of kidney recipients and donors involved 60 people, or 30 pairs. But hospitals prefer to limit, if possible, the number of pairs involved in organ exchanges, since they cannot handle an infinite number of transplants simultaneously. Mr. Roth's system helps find the most efficient exchange of organs so that the most patients can be saved with the fewest number of pairs involved in a given trade.

Here's more on Shapley from the NYT:

Mr. Shapley was born in Cambridge, Mass., and is a son of Harlow Shapley, a decorated astronomer. He received his bachelor's degree from Harvard, where his schooling was interrupted when he was drafted to fight in World War II. He received his Ph.D. in mathematics at Princeton, where he studied alongside John Nash, a fellow Nobel Laureate whom he later assisted personally and professionally when Mr. Nash was struggling with schizophrenia. Mr. Shapley taught at Princeton briefly before working at the RAND Corporation as a research mathematician and then moving to the University of California, Los Angeles, in 1981. He is married and has two sons. His work on matching -- as well as on other game theory issues, like predicting the outcomes of bargaining among multiple parties -- has been the foundation for the work of many other economists, and he was seen by some as wrongly omitted from Nobel Prizes awarded to other game theorists in 1994 and 2005.

Shapley is the sixth UCLA faculty member to be named a Nobel laureate. (UCLA Newsroom)