Harlow Shapley Project

Alvin E. Roth is Craig and Susan McCaw Professor of Economics at Stanford and George Gund Professor of Economics and Business Administration Emeritus at Harvard.

 “Lloyd Shapley was one of the founding giants of game theory. He shared the 2012 Nobel Prize in Economics for his seminal work with the late David Gale on stable matching – situations in which there are no two agents who would prefer one another over their current counterparts. But he could have won a Nobel for any of a number of his papers that initiated whole literatures,” wrote Alvin E. Roth, co-winner of the 2012 Economics Nobel. Roth, Alvin Lindau Lecture, 2016 

Roth’s contributions have built on Shapley’s work in two ways. First, Roth has built on the 1962 Shapley Gale algorithm. In 1974 Shapley and the late economist Herbert Scarf published a model for the money-free exchange of indivisible goods (‘barter exchange’). In the video, Roth explains how this enabled the organization of exchanges for kidney transplants when donors cannot directly donate to the patient of their choice because of incompatibilities. (For Shapley Scarf 1974, see Evolution Bibliography.pdf on The Work.)

Also, starting in the 1990s, Shapley’s ideas about two-sided matching and extended barter exchange led to a branch of economic engineering called market design, which seeks to find practical ways to fix broken markets. Market Design is Roth’s major field of teaching and research.

See Al Roth’s Game Theory, Experimental Economics and Market Design page for current work.

The Golden Goose Award is named for the unpromising bird that lays a golden egg. In 2012 Congressman Jim Cooper (D-TN) devised this whimsically titled award to highlight for Congress and the public the tremendous benefits of federally funded research. Each year since, a consortium of science organizations has chosen seemingly obscure studies funded by federal R & D that led to major breakthroughs and great societal impact.

In 2013 the Golden Goose Award honored Lloyd Shapley, the late David Gale, Shapley’s co-author on the 1962 paper on matching. Sharing the GGA was Alvin E. Roth of Stanford. Roth applied the top trading cycle algorithm from the Shapley Scarf paper to real-world problems such as kidney exchanges.

Gale did not qualify for the Nobel as it can only go to living persons. But his daughter was on hand for the Golden Goose ceremony and panel in September 2013. Deborah Shapley stood in for Lloyd.

Shapley, Gale and Roth’s prizewinning research was supported by the Office of Naval Research and the National Science Foundation.

Lloyd Shapley’s “lifelong contributions to game theory” were recognized in 1981 by award of the von Neumann Theory Prize by the Operations Research Society of America (ORSA) and The Institute of Management Sciences (TIMS). The citation read:

“Lloyd Shapley has dominated game theory for the thirty-seven years since von Neumann and Morgenstern published their path-breaking book, The Theory of Games and Economic Behavior. Shapley's key ideas include his inventions of convex games; stochastic games; the "Shapley" value for cooperative games; and his development of the theory of the core, including his independent discovery of the famous Bondareva-Shapley Theorem about the non-emptiness of the core.

“He has made important contributions to network flow theory and to non-atomic game theory. His work on the core influenced the development of fixed-point and complementarity theory, and his work on stochastic games influenced the development of dynamic programming. His individual work and his joint research with Martin Shubik has helped build bridges between game theory, economics, political science, and practice. “

When World War II started, Lloyd was studying mathematics as an undergraduate at Harvard. Once drafted, he trained to be a weather aggregator, comparing different forecasts and try to predict the weather three to five days in advance. The B-29s had to fly from India over The Hump to Chungdu in order to fly eastward to Japan.

Weather forecasts were critical to raid decisions. The Soviet forecasts were the most important, but were encrypted. Lloyd broke the Soviet weather code. This enabled more accurate forecasts in support of the Allied bombing campaign.  Lloyd returned to undergraduate study at Harvard and received the A.B. in Mathematics in 1948.

The Army Air Corps awarded Lloyd the Bronze Star in 1944. It is given for “either heroic achievement, heroic service, meritorious achievement, or meritorious service in a combat zone.”  

Alvin E. Roth Nobel Lindau Lecture 2016 Lloyd Shapley - Nobelist by Deborah Shapley