You Are A Matchmaker

Matchmaking isn’t limited to dating!

Matching 101

How to bring different players together in the best possible way is a key problem in economics. Traditional markets use money as a signal of value, and goods or services are allocated to those willing to pay the most. Classical economics says the market will clear at the price at which the willingness to produce (supply) equals the marginal willingness to pay (demand).

But what about markets without money?

These scarce resources are allocated through a “matching process.” In his book, Who Gets What and Why, Al Roth notes that “A market involves matching whenever price isn’t the only determinant of who gets what.”

He goes on to explain, “Matching is economist-speak for how we get the many thing we choose in life that also must choose us. You can’t just inform Yale University that you’re enrolling or Google that you’re showing up for work. You also have to be admitted or hired. Neigher can Yale or Google dictate who will come to them…”

The History of Matching Science

Beginning in the mid-1900s, David Gale and Lloyd Shapley studied different matching methods theoretically and were the first to define an algorithmic approach to optimal allocation. Beginning in the 1980s, Al Roth explained how markets function in practice. Shapley and Roth won the Nobel Prize for their work in 2012.

Since then, the field has been led by Tayfun Sönmez, Atila Abdulkadiroglu, and our co-founders, Parag Pathak and Josh Angrist. They expanded on the field by applying the science of matching to more complex real world scenarios - everything from medical treatments to school assignments to military deployments to talent placement.

In 2018, Parag Pathak won the John Bates Clark Medal, the most prestigious award for young economists, for his work on K12 school enrollment markets.

In 2021, Josh Angrist won the Nobel Prize in Economics for his work in this field, particularly for using natural experiments to infer causality.

In 2020, Parag and Josh co-founded Avela - the only company focused on solving matching problems. We offer the only software platform purpose built to solve matching problems, as well as a range of advisory services. And while we’re used the most in education, our tool can be used across industries.

Below are a few examples of matching markets in the wild.