UNIVERSITY PARK, Pa. — Ran Shorrer, associate professor of economics at Penn State, recently received the inaugural Market Design Impact Award from Institute for Operations Research and Management Sciences Auctions and Market Design.
The award, which Shorrer shared with longtime collaborators Avinatan Hassidim of Bar Ilan University and Google and Assaf Romm of Hebrew University of Jerusalem, recognizes significant contributions in the interdisciplinary field of market design, which studies the rules by which markets work so they can operate better.
Shorrer and his fellow researchers were recognized for their work in the area of matching market design, where people or entities are mutually paired based on factors other than price.
“Most economists study markets where prices connect buyers and sellers. However, many important interactions are not fully described by this model,” Shorrer said. “For example, selective colleges like Penn State do not simply allocate their seats to the students with the highest willingness to pay. Matching markets, like the college admissions market, are all around us, and we meet them at important junctions in life.
“We look for ways to make matching markets work better and we also implement the solutions in the field, when possible,” he continued. “Our goal has always been to help people, both directly by building systems and indirectly by disseminating our findings. To do so, we have relied heavily on a huge body of research by our community — people for whom I have the highest regard. Being recognized by this community is truly a great honor.”
The award committee lauded Shorrer and his collaborators for developing matching platforms that “directly improved the lives of thousands of people,” including creating centralized clearinghouses for the Israeli Psychology Master’s admissions, as well as helping to redesign the country’s medical internship match.
According to the committee members, “these efforts addressed real-world complexities such as non-standard preferences and diversity-seeking institutions, as well as political constraints needed to gain consensus among the participants, while ensuring that the resulting systems remained practical and transparent.”
The committee also cited the group’s research that led to the rise of the field now known as behavioral market design.
“Their insights have since inspired a growing body of research that examines how participants interact with markets and how mechanisms can be better explained and simplified to promote truthful reporting,” the committee noted. “Through this mix of rigorous theory, innovative design and attention to human behavior, [the researchers] have substantially advanced both the theory and practice of market design, exemplifying how it can address pressing social needs.”
According to Shorrer, market design is “a team sport” that involves many collaborators and stakeholders. At Penn State alone, he has partnered with S. Nageeb Ali, professor of economics, on theoretical aspects of matching markets; Hadi Hosseini, associate professor of informatics and intelligent systems, on computational aspects of matching markets; and Chloe Tergiman, associate professor of risk management, on behavioral market design.
He also advises several economics students conducting market design research, among them doctoral candidate Gonzalo Ballestero, who is working with governments in Latin America to improve how physicians are assigned to residencies with the goal of preventing brain drain.
Shorrer’s research has more recently ventured into the effects of large language models (LLMs) and artificial intelligence (AI) on markets, including examining regulators’ concerns that algorithmic pricing could lead to deceptive behaviors that harm consumers. He conducted experiments with Harvard University researchers Sara Fish and Yannai Gonczarowski that showed LLM-based pricing agents quickly and autonomously reach collusive price levels and profits.
“Furthermore, seemingly innocuous phrases in LLM instructions — ‘prompts’ — may substantially influence the intensity of this phenomenon,” said Shorrer, noting the research is getting some attention from European competition regulators.
In another project, Shorrer is working with University of Pennsylvania faculty members Kevin He and Mengjia Xia to show that human users self-project their preferences on AI.
“In other words, people think that AI is more aligned with their own preferences than it actually is,” he said. “As a result, humans might make mistakes in the type of tasks they delegate to an AI agent.”
Shorrer said he feels “blessed” to be able to help people while solving complex and exciting mathematical problems.
“I am always looking for other matching markets that can benefit from a little help,” he said.