AGEC 200 Lecture : 2012.10.16.docx
Document Summary
Nobel prize in economics al roth and lloyd shapely - game theory the market system is pretty efficient. Prices and the market are pretty good at allocating resources. There is an equilibrium and prices determine the efficient allocation of goods. How do we know that there is an efficient allocation? ie: Labour markets, post-secondary education, employers at a small computer company won"t necessarily hire the very best computer engineer, since they probably wouldn"t accept the job anyways. algorithms to determine this. Kidney donations - hospitals match donors - my loved one needs a kidney, but i"m not a match. I give my kidney to someone else who needs a kidney, their donor that also isn"t a match to their loved one, now gets my loved one"s kidney. More complicated when there are lots of donors and recipients. They developed this market to allow for these exchanges, since you can"t sell and buy kidneys on a free market.