Market Design & Policy Impact

Impact on the 2012 Economics Prize in Memory of Alfred Nobel

The Economics Prize in Memory of Alfred Nobel was awarded in 2012 to Alvin Roth and Lloyd Shapley for their contributions to the “Theory of Stable Allocations and the Practice of Market Design.” My heartfelt congratulations go out to them. I am also grateful to The Nobel Committee, which extensively cited my research in the scientific background document among the main contributions that led to this prize.

Research & Policy Impact Coverage in Media Outlets

The Organization of Liver Paired Exchanges and the World’s First Large Multi-way Exchanges

Liver Exchange vs Kidney Exchange

  • Living-donor liver transplantation differs from kidney transplantation in three major ways.
    • It is more invasive to the donor as a part of the liver is taken out instead of the whole kidney in kidney transplantation. Either the right lobe, which is substantially larger, the left lobe, or smaller segments of the left lobe numbered 2 and 3 can be used as grafts. It is generally riskier to donate the right lobe for the donor.
    • Tissue-type incompatibility does not play a role, while blood-type compatibility is still vital.
    • Size compatibility becomes an issue as a patient should not receive a graft less than 0.8% of her body weight and a substantially large graft that would not fit in the cavity. Thus, for adult patients, on average, a right-lobe graft fits better, although it is five-fold more mortal for the donor to donate, according to earlier data.
  • My first paper on the subject with Haluk Ergin and Tayfun Sönmez, “Efficient and Incentive-Compatible Liver Exchange,” Econometrica, (May 2020) 88(3): 965–1005
    modeled the problem from the angle of incentives of patient-donor pairs due to the higher risks associated with right-lobe donation and proposed an incentive-compatible 2-way exchange mechanism that could manage such a system, as all exchanges reported in the medical literature was 2-way exchanges up to that point.

BBS Liver Exchange System at Malatya Inonu University, Turkey

  • I founded, together with Tayfun Sönmez and the Liver Institute team at Malatya Inonu University, Turkey, under the direction of Prof. Dr. Sezai Yilmaz to start a living-donor liver exchange program, one of the very few in the world, in 2022. As with all policy work I have done, this is a pro-bono initiative as well.
  • Banu Bedestenci Sönmez Liver Paired Exchange System, which we named after Tayfun’s late wife, was announced to the public in July 2023. In the pilot period, in 1.5 years, 15 liver exchange transplants were carried out in the system, including the world’s first 4-way liver exchange and the third 3-way exchange.
  • Since the program was announced in July 2023, 57 additional liver exchange transplants have been carried out as of December 5th, including
    • two world first 5-way exchanges,
    • four world-first 4-way exchanges,
    • eight (and the world’s 3rd-10th) 3-way exchanges, and
    • eleven 2-way exchanges.
      For more up-to-date numbers, see the above web page.
  • The following paper is about the pilot period and the first 4-way liver exchange experience:
    “The First 4-Way Liver Paired Exchange from an Interdisciplinary Collaboration between Healthcare Professionals and Design Economists” (with Sezai Yilmaz, Tayfun Sönmez, Volkan Ince, Sami Akbulut, Burak Isik, Sukru Emre) American Journal of Transplantation, forthcoming.
  • Malatya Team has carried out more than 3600 liver transplants over the years, and they are one of the most experienced centers in the world, the second largest on an annual basis in the world. Their attitude toward left-lobe vs. right-lobe transplants is such that they prefer right-lobe transplants to adult patients, and left-lobe transplants are mostly reserved for pediatric patients. The risks associated with their hospital’s experience with right-lobe vs left-lobe transplants are very similar. Thus, we had to change our approach from our Econometrica paper to establish this system.
  • A large number of compatible pairs also enter the system for the patients to receive better matches than their paired donor due to size or ABO-identical match instead of just ABO-compatible.

Liver Exchange in the Rest of the World and the Importance of Multi-way Exchanges

  • The size compatibility requirement increases the scope of larger multi-way liver exchanges substantially beyond what can be achieved via 2-way exchanges.
  • Besides two exceptions, all exchanges carried out in the world are 2-way exchanges outside of our system.
  • As a result, the ratio of liver exchange transplants to all living-donor transplants is around 1.5% in the rest of the world where liver exchange is practiced. UNOS had to shut down their pilot liver exchange program as they could not conduct a single exchange in a one-year window because they exclusively focused on 2-way exchanges.
  • In Malatya, this percentage has been an order of magnitude larger, more than 10% when one includes the pilot phase, and substantially larger since July 2023.
  • See more on this Tayfun Sönmez’s and my NBER book chapter that will be published as Chapter 8 in Irene Lo, Michael Ostrovsky, Parag Pathak (eds) New Directions on Market Design, University of Chicago Press, “Influencing Policy and Transforming Institutions: Lessons from Kidney/Liver Exchange”

Ethical Allocation of Scarce Medical Resources Using Reserve Systems

  • Please visit the website for the policy and other impacts of my research on the ethical allocation of scarce medical resources.

The Organization of Living-Donor Kidney Paired Exchanges and Innovations Introduced

The Meta-Level Contribution

  • My academic papers and policy interactions, along with Alvin E. Roth and Tayfun Sönmez, played a key role in the establishment of kidney exchange programs that use economic and optimization-based principles around the world. My contributions in this regard were personally recognized by the scientific background of the 2012 Nobel Memorial Prize in Economics and the laureate recognition of the 2014 Frank Edelman Prize in Applied Analytics.
  • Here is the link to the presentation speech of Professor Torsten Persson of the Royal Swedish Academy of Sciences at the 2012 Nobel Memorial Prize Ceremony regarding the role of my research on kidney exchange in this award.
  • Here are some of my lecture notes explaining the concept of kidney exchange.
  • National Science Foundation web-published a story called “Kidney Exchange: A Life-Saving Application of Matching Theory” about my research with Alvin E. Roth and Tayfun Sönmez on kidney exchange.
  • The earlier achievements are surveyed in my survey paper with Tayfun Sonmez. More current developments are in this policy paper.

Role in the Establishment of Kidney-Exchange Programs

  • The New England Kidney Exchange Program (NEPKE): Dr. Frank Delmonico, Susan Saidman, Alvin E. Roth, Tayfun Sönmez, and I launched the New England Program for Kidney Exchange (NEPKE) in 2004. This is the first program that uses optimization-based mechanisms to find kidney exchanges. NEPKE became the forerunner of the US National Kidney Exchange Program and dissolved itself in it in 2010. The administrator of NEPKE, Ruthanne Hanto, currently administers the national program.
  • Alliance for Paired Donation (APD): Alvin E. Roth, Tayfun Sönmez, and I also helped the launching of the Alliance for Paired Kidney Donation, founded by Dr. Michael Rees through the funding of the University of Toledo and the University of Cincinnati in Ohio. APD is a cross-country kidney exchange registry.
  • The US National Kidney Exchange Program: The US National Kidney Exchange Program uses similar principles to the APD exchange system. I served on the advisory board for the development of the program and co-authored the OPTN policy proposal for the principles of the national kidney-paired donation program. NEPKE dissolved itself in it to become a de-facto national program in the United States: Ruthanne Hanto, the director of NEPKE, became the director of the UNOS National Program,

Adopted Key Contributions
(in Reverse Chronological Order)

  • Non-simultaneous non-directed altruistic donor chains: At APKD, we started to implement Never-Ending-Altruistic-Donor Chains (NEAD-Chains), an idea that we developed with Michael Rees and Jon Kopke. Here is the CNN story of the longest NEAD chain until March 2009, documented in my NEJM paper. Also, a 30-way non-simultaneous non-directed altruistic donor chain was reported. The National Kidney Registry (not to be confused with the US National Program) is currently the leading organization that facilitates kidney exchanges and uses mostly NEAD chains.
    • The NEAD-chain idea is based on the fact that chain transplants initiated by non-directed altruistic donors need not be done simultaneously. This idea was proposed in our AJT paper.
  • Gains from larger exchanges: In our AER paper “Efficient Kidney Exchange: Coincidence of Wants in Markets with Compatibility-Based Preferences,” we showed that using at-most 4-way exchanges, almost all gains from kidney exchange can be exploited. Based on this, we implemented priority mechanisms using at most 4-way kidney exchanges in NEPKE and APKD (see a related news story). The national program also uses 3-way exchanges.
  • Optimization and software: We have also authored the optimization software used in NEPKE and APKD.
  • Earlier optimization and two-way exchanges: In our JET paper “Pairwise Kidney Exchange,” besides our mechanism design approach, we propose using combinatorial optimization and graph theoretic techniques developed by Edmonds (1965) on organizing kidney exchanges. After we published `Pairwise Kidney Exchange’ as an NBER working paper in the summer of 2004, Johns Hopkins team published a paper in 2005 in the Journal of American Medical Association with simulations using the generalized version of Edmonds’ (1965) algorithm that we proposed in ‘Pairwise Kidney Exchange.’ Consequently, in 2005, The Johns Hopkins University Transplant Center adopted a pairwise kidney exchange scheme based on Edmonds’ algorithm.
  • Simultaneous non-directed altruistic and deceased donor chains: In our QJE paper “Kidney Exchange,” we propose the idea of a “w-chain exchange.” Non-directed altruistic donor chain exchanges are based on the same idea, and Johns Hopkins developed this second idea. Johns Hopkins University conducted the first 5-way non-directed donor chain exchange, in which a non-directed altruistic donor donates a kidney to the patient of the first pair, the donor of the first pair donates a kidney to the patient of the second pair, the donor of the second pair donates a kidney to the patient of the third pair, the donor of the third pair donates a kidney to the patient of the fourth pair. Finally, the donor of the fourth pair donates a kidney to a waiting list patient without a donor.

Kidney Exchange in Popular Culture

  • On 10/23/2008, the popular TV medical drama “Grey’s Anatomy” featured a 6-way simultaneous altruistic donor chain and emphasized the ethical and institutional constraints associated with the chain.
  • Tim Harford published a story in the Financial Times on 7/14/2007 about our work.
  • Steven Levitt and Stephen Dubner wrote a story citing our work in their Freakonomics column in the New York Times Magazine on 7/9/2006.
  • An article titled “Easing the Kidney Shortage” from the Wall Street Journal (6/17/2004) describes the basics of our kidney exchange system. It outlines that the New England region is considering the establishment of a cross-donor database and the adoption of a version of our proposed mechanism to carry out kidney exchanges among transplant patient-donor pairs.
  • Also, see another article titled  Cross-donor system planned for region’s kidney patients from the Boston Globe (6/5/2004).

Recommendation Systems for the Adoption of Children

Improving Pennsylvania State-wide Adoption Network

  • Together with Onur Kesten at Carnegie Mellon (now at the University of Sydney), his Operations Management colleague Mustafa Akan, and their then-student Vince Slaugh (now at Cornell, Ph.D. in OM), we initiated a project on “adoption of kids” in connection with State-wide Adoption Network (SWAN) of Pennsylvania to improve recommendation systems for suggesting families for adoptive children.
  • Previous recommendation tools have been unsuccessful in being used by social workers distributed to different parts of the state, who are looking for the best fits for the children up for adoption in the state network. They often bypassed recommendations made by the tools and used their limited network to find families. We have made some improvements to their system that aims to attain higher usage rates by social workers.
  • Here is the paper that explains those improvements (published in the Interfaces/INFORMS Journal on Applied Analytics):
    The Pennsylvania Adoption Exchange Improves Its Matching Process” (with Vincent W. Slaugh, Mustafa Akan, and Onur Kesten)

School Choice

School Choice in Turkey

The Ministry of Education of Turkey planned to implement a centralized school allocation scheme for public high schools, starting in 2018, based on student-school addresses and other idiosyncratic priority determinants and student GPA, etc., for each local school and exam scores for national exam schools.

  • I, together with Tayfun Sonmez and Umut Dur, presented to the Minister in January 2018 how a school-choice scheme can be implemented in Turkey. Bahcesehir University, with the help of our Boston College colleague, Can Erbil, organized and sponsored this meeting.
  • The slides of this presentation are here (in Turkish).
  • After our interactions in 2018, the Ministry’s Allocation Unit used the student-proposing deferred-acceptance (DA) algorithm.
    • For 2018, the priorities of students at schools were largely based on exam scores for national exam schools and street addresses, GPA, etc., for local schools.
    • Despite our objections, the school’s ranking in the student list was used as a tie-breaker ahead of other factors. For example, a student who ranked a school at 2nd place in her list would get higher priority than a student who ranked this school at 3rd place in his list if the higher-order priority criteria of these two students were the same.
    • If the priorities were purely lexicographic based on how students ranked the schools and then other factors, DA turned into the old “Boston” algorithm, aka immediate acceptance (IA) algorithm, which is known to be inferior to the textbook DA based on its manipulability and unfairness. Although the problems with the 2018 Ministry algorithm were less severe, it was still not strategy-proof.
  • After our further interactions in 2019, along with ITU economist Sinan Ertemel and Umut Dur’s presentation to the new Ministry administration, according to their new rulebook, the new Ministry Administration started implementing a system where priorities are not a function of how the students ranked the schools.

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