Deferred Acceptance Algorithms: History, Theory, Practice, and Open Questions

50 Pages Posted: 3 Jul 2007 Last revised: 22 Aug 2010

See all articles by Alvin E. Roth

Alvin E. Roth

Dept. of Economics, Stanford University; National Bureau of Economic Research (NBER)

Date Written: July 2007

Abstract

The deferred acceptance algorithm proposed by Gale and Shapley (1962) has had a profound influence on market design, both directly, by being adapted into practical matching mechanisms, and, indirectly, by raising new theoretical questions. Deferred acceptance algorithms are at the basis of a number of labor market clearinghouses around the world, and have recently been implemented in school choice systems in Boston and New York City. In addition, the study of markets that have failed in ways that can be fixed with centralized mechanisms has led to a deeper understanding of some of the tasks a marketplace needs to accomplish to perform well. In particular, marketplaces work well when they provide thickness to the market, help it deal with the congestion that thickness can bring, and make it safe for participants to act effectively on their preferences. Centralized clearinghouses organized around the deferred acceptance algorithm can have these properties, and this has sometimes allowed failed markets to be reorganized.

Suggested Citation

Roth, Alvin E., Deferred Acceptance Algorithms: History, Theory, Practice, and Open Questions (July 2007). NBER Working Paper No. w13225, Available at SSRN: https://ssrn.com/abstract=998008

Alvin E. Roth (Contact Author)

Dept. of Economics, Stanford University ( email )

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National Bureau of Economic Research (NBER)

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