A book that was recently translated in Italy by Nobel prize winner for economics Alvin E. Roth explores the mechanisms of wealth allocation in economic decisions

 

Companies move in an environment made up of scarce resources. And the company – which becomes an enterprise with its entrepreneur and which lives and acts with its managers  -, each day needs to deal with the shortage of wealth within it and outside it; indeed, it is through the combination of scarce wealth and goods, leading to other scarce wealth and goods, that the enterprise manages to grow, make a profit, generate well-being and wealth. Understanding from within the mechanism that moves this all means acquiring an in-depth knowledge of the economy. Beyond money.

This is what one learns by reading “Matchmaking. La scienza economica del dare a ciascuno il suo” (Italian translation of Who Gets What — and Why: The New Economics of Matchmaking and Market Design) written by Alvin E. Roth (Nobel prize winner for Economics in 2012), which has just been published in Italian.

It is important to read Roth’s work, but not only because of his pioneering research into market design , i.e. on the principles that govern those markets where money is not the only factor to determine who gets what. Reading Roth’s work is important because his clarity and simple statement of the facts accompanies the reader along a path that would otherwise be bitter and complex.

The main objective of the book (just under 300 pages long) consists, as mentioned above, in investigating the laws of the market economy that do not entail money changing hands. It is a much more widespread part of the economy than one might think. And it teaches two fundamental things for companies too: identifying the factors that make markets work well or badly and most of all teaching to make more secure and effective decisions to give “everyone what they deserve”, in other words allocate scarce resources effectively and efficiently.

To show us how widespread these markets are, Roth for example leads us to an aboriginal tribe that arranges marriages between unborn grandchildren, or he shows us the mechanism on which new companies such as Airbnb and Uber are based, whose success is for the most part determined by brilliant  market design.The register of the book is clear from the initial pages, as an example that is apparently far removed from economics: the allocation of scarce resources involved in organising organ transplants and the organisation behind them.

Roth explains in a particularly clear passage the importance of the theme: “The really interesting thing is that none of these elements, a kidney, an exclusive school, an enviable job, can be obtained by those who are willing to pay the most, or by those who are content with the minimum wage. In each case there has to be a match: a match between two counterparts”. It is indeed in the match of two counterparts that one of the “secrets” to a good business clearly lies.

 

 

 Matchmaking. La scienza economica del dare a ciascuno il suo (Italian translation of Who Gets What — and Why: The New Economics of Matchmaking and Market Design)

Alvin E. Roth

Einaudi, 2017

23/05/2017