Overview

Proponents of game theory have developed methods for analyzing people’s interests and applied them to a range of social and economic problems. Through this process, researchers have gained a deep understanding of how people behave under given systems of rules, often referred to as the rules of the game. As game theory has matured as a discipline that explains rational human behaviors under given rules, a new field called market design ” has rapidly developed. This field seeks to reverse the approach by asking, “What kind of system or game rules should we design to achieve desirable outcomes for people?” and aims to apply theoretical institutional design to real-world problems in an “engineering” manner. The engineering application of social science theory, once a distant dream, is finally being realized, and has become a cutting-edge research subject that attracts researchers from around the world. Based on this engineering perspective, the Center aims to design specific, detailed procedures (protocols and algorithms) for the optimal allocation of human and other assets. The fundamental theories that have produced particularly remarkable results in this research field so far are matching theory, which develops methods to match people or organizations with the right position, and auction theory, which develops methods to allocate valuable resources such as radio-spectrum frequency bands and airport takeoff and departure slots to the right entities. Auctions do with situations in which monetary transactions are possible, whereas matching deals mainly with cases in which money cannot be exchanged due to legal or ethical constraints. The Center was conceived as a new type of institution that not only uses and develops these fundamental theories but also promotes their practical implementation and public awareness.

By virtue of this background, the Center has the following unique features

The central concept of market design is that of placing the right resources in the right place, and creating systems that can withstand real-world use is essential to the optimal allocation of resources. In practical applications, for example, you need to solve the mathematical problem of what to combine and how to combine it within a realistic time frame, and knowledge of computer science is indispensable here. The Center therefore aims to achieve a truly organic integration at a high level with related fields such as computer science, beyond traditional economics, through interdisciplinary collaboration.

The Center implements insights derived from theory into society. Specifically, we aim to (1) conduct detailed surveys of the realities on the ground, (2) extract important theoretical points from these surveys, (3) derive theoretical solutions to these problems, (4) conduct computer simulations, (5) connect these to small-scale pilot implementations, and (6) carry out full-scale implementations. We will also develop software that offers a certain degree of versatility so that it can be customized as needed by the user, and provide it as a web service or similar platform.

The Center will feed insights from implementations back into theoretical development. Specifically, through implementation work, we aim to identify problems that have not been illuminated by previous research (real-world requirements) and create new theories to solve them. In this way, the Center will fulfill its mission as a research institute by not only applying existing research to the real world but also developing the theory itself. The Center focuses on five key areas.

See here for details of each department.

Professor Kojima (Director of UTMD Center, Graduate School of Economics, The University of Tokyo) and Professor Kamada (UC Berkeley) are conducting research to improve Japan’s issues with waiting lists for childcare and medical residency matching. (Starts around 36 minutes into the video)

A team led by Professor Pathak (Massachusetts Institute of Technology), a researcher at the Center, applied market design research to the allocation of medical resources during the COVID-19 pandemic. (Starts around 55 minutes into the video)

We are looking to collaborate (on joint research projects, social implementations, and the like) with companies, municipalities, and other organizations.

We are open to collaborating on any and all topics, from everyday issues such as job hunting, daycare shortages, and disaster recovery efforts to futuristic topics such as blockchain. We would love to hear from you.

We look forward to discussing how market design can be used to solve the issues you face and how we at UTMD can work with you on such efforts.