BAEcon Economics

In many situations, for legal or ethical reasons, scarce resources are allocated without using prices, and alternative instruments to match demand and supply as to maximize welfare should be implemented. Real-life applications are abundant, including organ allocation for transplant patients, teacher assignments in public schools, access to public universities, refugee settlement, and more. Matching theory provides the analytical framework to study these problems. This course develops a comprehensive theoretical foundation for understanding such markets and explores several real-world applications, such as college admissions, public school enrolments, organ transplantation systems, and others.

(ECON20512 or ECON20022) AND (ECON20110 or ECON20222)

Pre-requisite units: 

(ECON20512 Intermediate Microeconomic Theory 2: Time, Uncertainty, and Information OR ECON20022 Microeconomics 4) AND (ECON20110 Econometrics OR ECON20222 Quantitative Methods) 

At the end of the course, students will be able to:
- Use micro-founded models of mechanism and market design;
- Use state-of-the-art frameworks to understand the efficiency equity trade-offs in the design of real-life marketplaces;
- Estimate the impact of different market reforms.
 

By the end of the unit, students are expected to:

• To have gained a deep understanding of the workings of matching markets, thereby gaining the knowledge and skills required for either further academic work in this area or for employment in industry and government.

• To have developed their ability to communicate verbally and in writing about current economic issues, findings and methods

• To have developed their ability to work effectively in teams
 

Syllabus (indicative curriculum content):
1.  Introduction to matching markets
2. Assigning Scarce Resources Without Money: designing systems that are efficient, truthful, and fair.
3. The Top Trading Cycle mechanisms
4. Application: algorithms that aim to match pupils to schools in a way that respects both the pupils' preferences and the schools' priorities.
5. Two-sided matching problems. The Deferred Acceptance mechanism
6. Application: College admissions in UK and abroad. Centralized versus decentralized systems.
7. Applications; Organ allocations. Kidney exchange programs. 
 

Lectures: in the lectures content will be presented to students. This will include information on the skills required of economics graduates and advice on the development of these skills. Hours: 16

Tutorials: In the tutorials students will be given opportunities to develop their verbal and written communication skills and receive feedback on these skills. Tutorials will be a combination of exam-type questions and discussion of empirical papers. Hours: 6

Independent Study and assessment preparation: Students are expected to engage in work within their group and independently using the asynchronous material provided. This includes weekly guided reading, preparation for lectures and tutorials as well as preparation and delivery of assessment items.  Hours: 178
 

• Develop an understanding on how marketplaces (with their associated infrastructure, rules, information exchange customs and transaction structures), influence the functioning of markets and the welfare of their participants.

 

•  Understand and identify how the market design for matching markets differ from markets for standard commodities.  

• Analyse a current economic problem using all the economic and econometric tools covered in this and in the pre-requisite course units

• Analyse and estimate the welfare effects of designing and implementing different market structures.

• Synthesise and organise material from various sources (including electronic and online resources), and to summarise this material concisely and clearly.

 

• Communicate accurately and clearly on current economic issues, findings, and methods both verbally and in writing

 

• Work collaboratively in a small team in a professional and collegial manner to organise and complete project work

Formative Assessment

Recorded practice presentation: Students will be given the opportunity to submit a recorded practice presentation on a given paper. 
 

Summative Assessment

Group Project and Presentation (40%)

Final Exam (60%)

Formative Assessment

Feedback will be given to the students via feedback forms – students can also attend office hours for more in depth feedback regarding their work.  
 

Summative Assessment

Group Project and Presentation - Module level, individual and group feedback

Final Exam - On script and group feedback

 

A useful textbook is
Market Design: Auctions and Matching by Guillaume Haeringer ,  The MIT Press; 2018,
Chapters 9,10,11,13,16.

There is no required textbook. Materials will be drawn from policy papers, journal articles, and other online resources. These readings will relate to pre -requisite modules in Microeconomics, Macroeconomics, and Econometrics. This will be supplemented by guides and information related to skills development.