Narrator: Imagine a patient is dying from kidney failure. Their spouse is a perfect match in every way—loving, devoted, and desperate to help. They are also willing to donate one of their own kidneys. There’s just one problem: their blood types are incompatible. The transplant is impossible. In another city, another couple faces the exact same tragic dilemma. A husband needs a kidney, and his wife is willing to donate, but again, they are not a match. For decades, these situations were dead ends, resulting in prolonged suffering and death. But what if the donor from the first couple was a match for the patient in the second? And what if the donor from the second couple was a match for the patient in the first? Suddenly, two lives could be saved. This elegant solution is not a medical breakthrough, but an economic one. It’s a prime example of market design, the subject of Alvin E. Roth’s Nobel Prize-winning book, Who Gets What—And Why. Roth, an economist who acts more like an engineer, reveals the hidden architecture that governs our lives, showing how we can fix broken markets and build new ones to allocate scarce resources, from life-saving organs to seats at top public schools.

Narrator: When people think of a market, they often picture a stock exchange or a supermarket, where money and prices are the primary forces determining who gets what. These are what Roth calls "commodity markets." If you want to buy a barrel of oil or a share of Apple stock, the price is all that matters; the oil doesn't care who buys it, and Apple doesn't care who owns its stock.

However, Roth argues that many of life’s most important transactions take place in "matching markets," where price is not the only, or even the most important, factor. Think about applying to college. You can’t just show up at Harvard and buy a degree, no matter how much you’re willing to pay. You have to be chosen. Likewise, Harvard can’t just force students to attend; the students must also choose Harvard. The same is true for the job market. A company can’t just hire you; you have to accept their offer. In these markets, both sides must choose each other. Preferences, qualifications, and strategy are just as important as money. This two-sided choice is what makes matching markets fundamentally different and far more complex to organize.

Narrator: A well-functioning market needs to be three things: thick, uncongested, and safe. A "thick" market has enough participants to offer a wide range of choices. An "uncongested" market allows participants to consider their options and act in a timely manner. And a "safe" market is one where people can trust the system and reveal their true preferences without being penalized. When markets fail, it’s often because one of these properties has broken down.

One common failure is "unraveling," where transactions start happening earlier and earlier. For decades, the market for new lawyers unraveled as top law firms, desperate to secure the best talent, began making job offers to students before they had even finished their first year of law school. This forced students to make career-defining decisions with almost no information.

Another failure is "congestion." In the early days of online dating, popular women were so overwhelmed with messages that they couldn't possibly sort through them all. In response, men sent out more and more generic messages, creating a feedback loop of noise that made it nearly impossible for anyone to find a meaningful connection. The market was thick, but it was too congested to work.

Finally, markets fail when they aren't "safe." Before its redesign, the Boston Public Schools choice system required parents to rank their top schools. However, the system heavily favored a family's first choice. If a family listed a highly competitive school first and didn't get in, they lost their chance at less competitive schools that they might have listed second or third. This forced parents to "game the system" by strategically listing a "safer" school first, rather than the one they truly wanted. The market was unsafe because revealing your true preference was a risky gamble.

Narrator: To fix these broken markets, designers often turn to centralized clearinghouses powered by sophisticated algorithms. The most famous example is the National Resident Matching Program (NRMP), or "the Match," which assigns medical school graduates to residency programs across the United States. Before its creation in 1952, the market for new doctors was in chaos, suffering from the exact kind of unraveling seen in the legal market.

The Match solved this by creating a system where both students and hospitals submit a ranked list of their preferences. An algorithm then processes these lists to produce a "stable" matching. A stable match is one where no student and hospital who are not matched would both prefer to be with each other. This is crucial, because if unstable pairs exist, people will make deals outside the system, and the market will collapse.

The genius behind this is the deferred acceptance algorithm, which was proven to always produce a stable outcome. This same powerful algorithm was later used to fix the broken school choice systems in New York City and Boston. By creating a centralized, strategy-proof system, designers made it safe for students and parents to list their true preferences, dramatically improving outcomes and reducing the number of students left unassigned.

Narrator: Nowhere is the power of market design more profound than in the allocation of human organs. With over 100,000 people in the U.S. waiting for a kidney, the need is immense. Roth and his colleagues applied the principles of matching markets to create kidney exchange programs. As described earlier, these programs find ways to match incompatible patient-donor pairs.

The innovation didn't stop there. Market designers realized that altruistic, or "non-directed," donors—people willing to give a kidney to any stranger—could be used to start incredible transplant chains. For example, an altruistic donor gives a kidney to Patient A. Patient A's incompatible donor then "pays it forward" by giving a kidney to Patient B. Patient B's incompatible donor gives to Patient C, and so on. In 2007, a donor named Matt Jones started a chain that resulted in ten transplants across five states. These non-simultaneous chains solved the logistical nightmare of coordinating multiple surgeries at once and dramatically increased the number of lives saved, all without a single dollar changing hands.

Narrator: In our hyper-connected world, many markets suffer from congestion. College admissions offices and employers are flooded with applications, making it hard to know who is genuinely interested and who is just applying everywhere. To solve this, market designers use "signals."

Roth helped design a signaling mechanism for the job market for new Ph.D. economists. Each candidate is given just two "signals" they can send to employers to indicate their sincere interest. Because the signals are scarce, they are credible. An employer who receives a signal knows the candidate used one of their precious few opportunities to contact them, making that candidate stand out from the hundreds of other applicants. This simple mechanism helps both sides cut through the noise, reducing congestion and leading to better, more efficient interviews and matches.

Narrator: Finally, market design must contend with a powerful and often invisible force: repugnance. Some transactions are forbidden not because they cause direct harm, but because society finds them morally objectionable. For instance, most countries have laws against paying for human organs. While a free market for kidneys might solve the shortage overnight, the idea is considered repugnant because of concerns about coercion and the objectification of the human body.

Repugnance changes over time and across cultures. Same-sex marriage was once widely considered repugnant and was illegal; today, it is commonplace. Market designers must navigate these ethical boundaries. Kidney exchange is a brilliant example of this, as it increases the supply of organs through in-kind exchange (a kidney for a kidney) without crossing the line into monetary payment, thereby avoiding the repugnance associated with selling body parts. This shows that clever design can often achieve the goals of a forbidden market without violating society's deeply held values.

Narrator: The single most important takeaway from Who Gets What—And Why is that the concept of a "free market" is a myth if it’s understood as a space with no rules. In reality, markets are human inventions, and their freedom and efficiency depend entirely on having well-designed rules that make them thick, uncongested, and safe. Freedom in a market comes from its rules, not from their absence.

Alvin Roth's work transforms economics from a science of passive observation into a discipline of active engineering. It challenges us to look at the invisible systems that allocate everything in our lives—from our jobs to our children's schools to life-saving organs—and ask a simple but profound question: Could we design this better? The book leaves us with the powerful idea that we are not just passive participants in the markets that shape our world; we can, and should, be their architects.