Shapley, Lloyd Stowell (1923-2016), an American economist, won the 2012 Nobel Prize in economic sciences. He shared the award with the American economist Alvin E. Roth. The men received the award for their work in markets in which money is not an acceptable form of exchange. In these markets, it may be that people do not customarily pay for goods, or it may be that society would be shocked if payment occurred. In such markets, it can be difficult to make matches between parties. For example, this matchmaking could involve a group of students that must be paired with schools or donated organs that must be matched with ill patients. It usually is not possible for each person in such a pool (group) to get his or her best or first choice. The work of Roth and Shapley, however, allows for the best possible matches. After the best possible matches are made, no match can be changed to make someone better off without another person being made worse off.
Shapley began working on game theory in the 1950’s and 1960’s. Game theory is a method of studying decision-making situations in which the choices of two or more individuals or groups influence one another. Using game theory, Shapley sought a way to match people in a group such that no two paired partners could gain by swapping partners. This problem in economics is known as the Stable Marriage Problem. When all of the people in the pool are paired in this manner, economists call this a stable match. Shapley and the American economist David Gale developed a mathematical formula that allows economists to most efficiently match people in a group. This formula is called the Gale-Shapley algorithm.
Shapley’s work has numerous practical applications. The algorithm can be used to pair a group of students as roommates or to place a group of medical students into hospital residency programs.
Shapley was born on June 2, 1923, in Cambridge, Massachusetts. He was a student at Harvard when he was drafted during World War II (1939-1945). He completed his bachelor’s degree at Harvard in 1948. Shapley worked at the RAND Corporation, a research organization devoted to national security, for a year following his graduation. He received a doctorate from Princeton in 1953. Shapley taught at Princeton from 1952 to 1954, then returned to the RAND Corporation. In 1981, he left the RAND Corporation and began teaching at the University of California, Los Angeles (UCLA). He retired from teaching in 2000. Shapley died on March 12, 2016.
See also Game theory ; Nobel Prizes ; Roth, Alvin Eliot .
