If you’re wondering how several of our future dental specialists and physicians are placed into their residency, then you will be pleased to know that the backbone of this process is a Nobel Prize winning theory. In 2012, Alvin E. Roth and Lloyd S. Shapley were awarded the Nobel Prize in economic sciences for the theory of stable allocations and the practice of market design. Here’s a little background on the their idea:

What makes resident matching so complex? The relationship between applicant and hopeful residency is unique from that between buyer and seller, i.e. a commodity market. In a commodity market, the transaction is dictated largely by price of the good or service being sold. This sort of transaction is not applicable to a 2-sided matching market. In matching, a mutual choosing type of arrangement is established in which both parties should feel satisfied with the match, without the simplicity of cost as a driving factor. In matching, stability is key. Stability is achieved when both parties perceive that additional trading would not be beneficial.

The National Residency Matching Program (NRMP) has existed since the 1950s and serves as a sort of “central clearing house” that applicants use. Initially, the student’s application was sent out to the first choice school. In the event of rejection, the application was then forwarded to the next choice. This inelegantly placed the student in a less desirable position as many spots were filled upon applying to alternative choices.

Over the next several years, the system would be revised to better serve both parties. Roth applied Shapley’s, deferred acceptance algorithm (based on Cooperative Game Theory) to NRMP. Whereby the preferences of applicant and program are met via a ranking system.

So how does matching work? A pre-designated interview period is established. Following the interview period, both the residency program and resident applicant are asked to rank each other in a Rank Order List (ROL). The matching service then allocates the specific applicant to the residency based on rankings of both parties.

Such stable matching has been host to other areas, like high school applications in New York and kidney donor matching. Although no system is without flaws, the current program has progressed substantially with the guidance of current economic thinking.

~Courtney Worlinsky, Florida ’14