Game Theory in Action

August 25, 2010hkcommunity, gaming, social impactNo Comments

Kwang Lim tells about his collegue Sven Feldman applying a Game Theory Concept – The Gale-Shapley Mechanism – to help a city council matching children to kindergartens. The problems so far were e.g. inefficient matching, an incentive for parents to misrepresent their preferences, and “justified envy“, whereby a student prefers a school S that she was not admitted to, despite having a higher priority than another student who was in fact admitted to school S.
The proposal should supersede the approach used so far and involves the following steps:

In step 1, parents get to propose their first ranked kindergarten. Schools temporarily assign seats to proposers based on their expressed priority, others are rejected. In step 2, each rejected parent proposes her next choice. Schools then consider the pool of accepted students plus the proposer, and update their tentative offers based on expressed priorities. This repeats until a stable state is reached, at which point the tentative offers are finalized. This should keep everybody involved more happy.

Practical applications of game theory are making a difference in daily life.

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