Two Americans Win Nobel Prize in Economics for "Stable Allocation" Theory

Americans Alvin Roth and Lloyd Shapley have won the 2012 Nobel Prize for economics. They got the award "for the theory of stable allocations and the practice of market design."

Lloyd Shapley studied game theory and is responsible for creating the so-called Gale-Shapley algorithm which aims to create "stable matches."

The idea is to pair agents in such a way that no two can be found that want to be paired together but are stuck with others.

Alvin Roth took the theory and applied it to various practical problems, refining the method for particular needs. He created methods for matching students with colleges, organs with patients in need and so on.

The economics award is not technically a Nobel Prize since it wasn't part of the original set of sciences and arts that were to be honored when the foundation was set up by Albert Nobel himself.

However, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been around since 1968 and is considered just as important as the others.