Market Design

Catalog description

Markets are powerful tools for organizing economic activity and distributing economic gains, but they often raise questions about fairness, ethics, and the limits of relying on prices alone. This course introduces students to the field of market design—a branch of economics that asks how rules, institutions, and incentives can be structured to achieve better social outcomes. By discussing historical examples and cutting-edge problems, as well as engaging in market experiments in class, students will learn about markets ranging from medical residency matching to auction design and voting systems. Students will explore and actually experience when markets work well on their own, when they fail, and how thoughtful design can help. The course blends conceptual understanding with light formal modeling, helping students reason rigorously about efficiency, equity, and the role of information in economic systems. Alongside theory, students will examine real-world successes and failures, engaging with ethical dilemmas such as the repugnance of certain transactions, the tradeoffs between efficiency and fairness, and the consequences of imperfect information. By the end, students will be able to critically analyze and propose market rules in settings where "natural" outcomes may fall short of society's goals. Prerequisites: 73-104 or 73-102