Market Design


Markets are the basic mechanism by which resources are allocated to agents. These resources include simple objects, courses in an MBA program for example, or complex entities, like firms, which themselves have preferences over various sets of agents. Many of these markets are engineered by a central organization with a particular eye towards stability and efficiency. Examples are prolific and include diverse settings with their own peculiarities, such as medical labor markets, organ donation, school choice programs, and the matching of cadets to army positions. A rich theory has evolved around the design of such markets and has been successfully applied to a wide variety of applications, including those listed above.

This advanced Ph.D. level course gives students a background in the theory of market design, as well as its numerous successful applications and corresponding engineering concerns. We begin with the standard theory of stable matching introduced by Gale and Shapley (1962) and Shapley and Scarf (1964), and study its application to the National Residency Matching Program. We then discuss extensions of the theory to contracts, housing allocation, and allocation with priorities.

The main textbook for the course is Roth and Sotomayor, Two-Sided Matching. Readings will additionally include seminal research papers and lecture notes. Grading will be based on class participation, a series of 3 homework assignments, and a final presentation. While there are no official pre-requisites, students are expected to have a solid understanding of basic economic theory and relevant mathematical foundations.

This course is offered in conjunction with a reading seminar by Rakesh Vohra. Students are encouraged to attend the seminar and develop final presentations based around the discussions in the reading seminar. Additionally, in the spring, Tayfun Somnez will offer a mini-course on market design, and through-out the spring semester at University of Chicago, Eric Buddish and Scott Kominers will offer a parallel course covering similar topics. There will be occasional optional joint meetings and seminars with the U. of Chicago group in downtown Chicago.


Lectures: Tech L221, 3-6pm

Professor: Nicole Immorlica
Email: nickle at eecs dot northwestern dot edu
Office Hours: by appointment, Ford 3.327

Textbook: Two-Sided Matching: A Study in Game-Theoretic Modeling and Analysis, by Alvin E. Roth and Marilda A. Oliveira Sotomayor
Grading: based on class participation and exercises


  • Check out the MATCH-UP 2012 workshop. The submission deadline is in March.
  • To register for the course, please attend the first meeting on Jan. 4th at 2pm in Tech L221. At that meeting, we will discuss the time and locale of future lectures attempting to accommodate everyone's schedule.


  • 4 January, 2012. Lecture 1: stable matching model, structure
  • 11 January, 2012. Lecture 2: structure, incentives
  • 18 January, 2012. CANCELED
  • 25 January, 2012. Lecture 3: incentives, many-to-one matching
  • 1 February, 2012. Lecture 4: matching with contracts, large market results
  • 8 February, 2012. Lecture 5: large market results
  • 15 February, 2012. Lecture 6: discrete allocation, kidney exchange
  • 22 February, 2012. Lecture 7: kidney exchange
  • 29 February, 2012. Lecture 8: school choice


  • Exercises have been posted and are due February 29th. You should complete six of the nine problems for full credit.

    Reading Projects