Maximizing Luck: Masters in Business with Judd Kessler | Masters in Business
From Masters in Business
Judd Kessler•Professor of Behavioral Economics and Market Design, Wharton
Executive Summary
Wharton Professor Judd Kessler discusses market design, the field of economics focused on allocating scarce resources in systems where price is not the only mechanism.
The conversation uses real-world examples like Taylor Swift concert tickets to illustrate how 'first-come, first-served' systems are exploited by bots and middlemen, and explores solutions like lotteries and identity-verified tickets.
The discussion extends to life-or-death markets, such as organ donation, analyzing how different incentive structures (like Israel's priority system for registered donors) can significantly increase the supply of kidneys.
Kessler argues that by understanding and redesigning the rules of these 'hidden markets,' society can create more efficient, equitable, and user-friendly outcomes for everything from housing to healthcare.
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Concerns Raised
Inefficiencies in 'first-come, first-served' systems are easily exploited by bots.
Poorly designed markets enable rent-seeking middlemen who extract value without creating it.
Suboptimal organ donation policies lead to a critical shortage and the discarding of viable kidneys.
Significant underbuilding of affordable housing creates massive, lottery-based allocation problems.
Opportunities Identified
Redesigning allocation systems to be more equitable and efficient using lotteries and preference-based matching.
Implementing non-monetary incentives to increase the supply of public goods like organ donations.
Using technology like identity verification to eliminate brokers in markets like live event ticketing.
Applying market design principles to improve outcomes in diverse areas like school choice, housing, and employment.