video transcript

(SOUNDBITE)(Swedish) PERMANENT SECRETARY OF THE ROYAL SWEDISH ACADEMY OF SCIENCES, STAFFAN NORMARK, SAYING: "This year's Nobel prize is about paring together different agents in the best possible way. The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel for 2012 to professor Alvin E Roth at Harvard University, Cambridge and Harvard Business School Boston MA and Professor Lloyd S Shapley at University of California. And the citation runs for the theory of stable allocations and the practice of market design" (SOUNDBITE)(English) PROFESSOR PER KRUSSEL SAYING: "This year's prize in economic sciences is about economic engineering. It's about how to practically design certain markets so that they work well. The context is situations where the task is to pair together two parties like physicians to hospitals or students to schools. These are situations where the traditional market mechanism is expected to not work well." STILL PICTURE OF ROTH)/ (SOUNDBITE)(English) AUDIO OF NOBEL LAUREATE ALVIN ROTH SAYING: "Of course it sheds a very bright spotlight on the work we do, so that's a good thing. My colleagues and I work in an area that we're calling market design, which is sort of a newish area of economics and I'm sure that when I go to class this morning my students will pay more attention." United States economists Alvin Roth and Lloyd Shapley have won the 2012 Nobel prize for economics for research on how to match different economic agents such as students for schools or even organ donors with patients. The Royal Swedish Academy of Sciences, which made the award, said the 8 million crown (1.2 million U.S. dollar) prize recognised "the theory of stable allocations and the practice of market design". The award citation said Shapley had used game theory to study and compare various matching methods and to make sure the matches were acceptable to all counterparts, including the creation of a special algorithm. Roth followed up on Shapley's results in a series of empirical studies and helped redesign existing institutions so that new doctors could be matched with hospitals, students with schools or patients with organ donors. The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.