Market design has become an exciting area of economics research, with many of its findings useful for setting detailed rules in real markets. For matching markets, most proposed designs aim to be "straightforward" - making it a dominant strategy for participants to report information truthfully. But some recent matching and auction designs sacrifice incentive-compatibility conditions to give priority to various other desiderata. This lecture reviews the goals of market design and the unavoidable trade-offs that are sometimes required, and explores how economists should seek to resolve these trade-offs.

Paul Milgrom is the Shirley and Leonard Ely professor of Humanities and Sciences in the Department of Economics at Stanford University and co-founder and chairman of Auctionomics. He is a member of both the National Academy of Sciences and the American Academy of Arts and Sciences. He is best known for his contributions to the theory of auctions, for pioneering contributions to the practical design of multi-item auctions, and as a bidding advisor. His research has also advanced understanding in many other areas of economics, including incentive theory, industrial economics, economic history, the economics of manufacturing, the economics of organizations, and game theory. His most recent research focuses on issues of market design, including an emphasis on the ways that market participants express their preferences.

Return to the Nemmers Prize Home Page