Economists often look at markets as given, and try to make predictions about who will do what and what will happen in these markets Market design, by contrast, does not take markets as given; instead, it combines insights from economic and game theory together with common sense and lessons learned from empirical work and experimental analysis to aid in the design and implementation of actual markets In recent years the field has grown dramatically, partially because of the successful wave of spectrum auctions in the US and in Europe, which have been designed by a number of prominent economists, and partially because of the increase use of the Internet as the platform over which markets are designed and run There is now a large number of applications and a growing theoretical literature.

The Handbook of Market Design brings together the latest research from leading experts to provide a comprehensive description of applied market design over the last two decades In particular, it surveys matching markets: environments where there is a need to match large two-sided populations to one another, such as medical residents and hospitals, law clerks and judges, or patients and kidney donors It also examines a number of applications related to electronic markets, e-commerce, and the effect of the Internet on competition between exchanges

Nir Vulkan, Associate Professor of Economics, Said Business School, University of Oxford,Alvin E. Roth, Professor of Economics, Stanford University and Nobel Laureate in Economics 2012,Zvika Neeman, Associate Professor, Berglas School of Economics, Tel Aviv University

Alvin E. Roth was awarded the Nobel Prize in Economics 2012 for his work on market design. He received his B.S. from Columbia University in 1971 and Ph.D. from Stanford University in 1974. He taught at the University of Illinois from 1974-82, at the University of Pittsburgh from 1982-98, at Harvard University from 1998-2012, and he now teaches at Stanford.


Nir Vulkan is an Economics Professor at the Said Business School and a Fellow of Worcester College, Oxford University. He has written many articles on market design and is author of 'The Economics of E- Commerce' (Princeton University Press, 2003). He has worked with many software and e-commerce companies designing markets mainly on the Internet, which are used by humans and software agents. His algorithms for automated trading have been used by hedge funds to trade futures in markets all over the world.


Zvika Neeman is a microeconomic and game theorist who specializes in mechanism design. He teaches at the Berglas School of Economics at Tel Aviv University. Prior to that, he held positions at Boston University and at the Hebrew University of Jerusalem.

Alvin E. Roth, Nir Vulkan, and Zvika Neeman: Introduction
Part I: General Principles
1: Alvin E. Roth: What Have We Learned From Market Design?
2: Gary Bolton: Not Up To Standard: Stress Testing Market Designs for Misbehavior
3: Paul Klemperer: Using and Abusing Auction Theory
Part II: Cases
Section II.A: Matching Markets
4: Tayfun Sönmez and Utku Unver: Market Design for Kidney Exchange
5: Atila Abdulkadiroglu: School Choice
6: Aytek Erdil and Haluk Ergin: Improving Efficiency in School Choice
7: Sarbartha Bandyopadhyay, Fedor Iskhakov, Terence Johnson, Soohyung Lee, David McArthur, John Rust, Joel Watson, and John Watson: Can the Job Market for Economists be Improved?
8: Joshua Gans and Scott Stern: Designing Markets for Ideas
9: Ashok Rai and Tomas Sjöström: Redesigning Microcredit
Section II.B: Auctions
10: Paul Klemperer: The Product-Mix Auction: a New Auction Design for Differentiated Goods
11: Paul Milgrom and Robert W. Day: Optimal Incentives in Core-Selecting Auctions
12: Peter Cramton, Samuel Dinkin, and Robert Wilson: Auctioning Rough Diamonds: A Competitive Sales Process for BHP Billiton's Ekati Diamonds
Section II.C: E Commerce
13: Axel Ockenfels and Alvin E. Roth: Ending Rules in Internet Auctions: Design and Behavior
14: Andrew Byde and Nir Vulkan: Designing Markets for Mixed Use of Humans and Automated Agents
15: Benjamin Edelman: The Design of Online Advertising Markets
16: Tuomas Sandholm: Very-Large-Scale Generalized Combinatorial Multi-Attribute Auctions: Lessons from Conducting $60 Billion of Sourcing
17: Nir Vulkan and Chris Priest: Designing Automated Markets for Communication Bandwith
Section II.D: Law Design
18: Zvika Neeman and Alon Klement: A Mechanism Design Approach to Legal Problems
19: Aviad Heifetz, Ella Segev, and Eric Talley: Legislation with Endogenous Preferences
Part III: Experiments
20: Lawrence M. Ausubel, Peter Cramton, Emel Filiz-Ozbay, Nathaniel Higgins, Erkut Ozbay, and Andrew Stocking: Common-Value Auctions with Liquidity Needs: An Experimental Test of a Troubled Assets Reverse Auction
21: Uri Gneezy and Martin Dufwenberg: Information Disclosure in Auctions: An Experiment
22: Elena Katok: Buyer Determined Procurement Auctions Experiments
23: Uri Gneezy and Ernan Haruvey: The Inefficiency of Splitting the Bill
Part IV: Competing Designs
24: Michael Peters: Competing Mechanisms
25: Zvika Neeman and Nir Vulkan: Three Case Studies of Competing Designs in Financial Markets
Introduction, Nir Vulkan, Alvin E. Roth, and Zvika Neeman
Part I: General Principles
1. What Have We Learned From Market Design?, Alvin E. Roth
2. Not Up To Standard: Stress Testing Market Designs for Misbehavior, Gary E. Bolton
3. Using and Abusing Auction Theory, Paul Klemperer
Part II: Cases
Section II.A: Matching Markets
4. Market Design for Kidney Exchange, Tayfun Sonmez and Utku Unver
5. School Choice, Atila Abdulkadiroglu
6. Improving Efficiency in School Choice, Aytek Erdil and Haluk Ergin
7. Can the Job Market for Economists be Improved?, Sarbartha Bandyopadhyay, Fedor Iskhakov, Terence Johnson, Soohyung Lee, David McArthur, John Rust, Joel Watson, and John Watson
8. Designing Markets for Ideas, Joshua S. Gans and Scott Stern
9. Redesigning Microcredit, Ashok Rai and Tomas Sjostrom
Section II.B: Auctions
10. The Product-Mix Auction: A New Auction Design for Differentiated Goods, Paul Klemperer
11. Optimal Incentives in Core-Selecting Auctions, Robert Day and Paul Milgrom
12. Auctioning Rough Diamonds: A Competitive Sales Process for BHP Billiton's Ekati Diamonds, Peter Cramton, Samuel Dinkin, and Robert Wilson
Section II.C: E-Commerce
13. Ending Rules in Internet Auctions: Design and Behavior, Axel Ockenfels and Alvin E. Roth
14. Designing Markets for Mixed Use of Humans and Automated Agents, Andrew Byde and Nir Vulkan
15. The Design of Online Advertising Markets, Benjamin Edelman
16. Very-Large-Scale Generalized Combinatorial Multi-Attribute Auctions: Lessons from Conducting $60 Billion of Sourcing, Tuomas Sandholm
17. Designing Automated Markets for Communication Bandwith, Nir Vulkan and Chris Priest
Section II.D: Law Design
18. A Mechanism Design Approach to Legal Problems, Alon Klement and Zvika Neeman
19. Legislation with Endogenous Preferences, Aviad Heifetz, Ella Segev, and Eric Talley
Part III: Experiments
20. Common-Value Auctions with Liquidity Needs: An Experimental Test of a Troubled Assets Reverse Auction, Lawrence M. Ausubel, Peter Cramton, Emel Filiz-Ozbay, Nathaniel Higgins, Erkut Y. Ozbay, and Andrew Stocking
21. Information Disclosure in Auctions: An Experiment, Martin Dufwenberg and Uri Gneezy
22. Experiments with Buyer-Determined Procurement Auctions, Elena Katok
23. The Inefficiency of Splitting the Bill, Uri Gneezy, Ernan Haruvy, and Hadas Yaffe
Part IV: Competing Designs
24. Competing Mechanisms, Michael Peters
25. Three Case Studies of Competing Designs in Financial Markets, Nir Vulkan and Zvika Neeman