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Finance and the Good Society by Robert J. Shiller

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Chapter 8

Market Designers and Financial Engineers

Market designers, sometimes called mechanism designers, start with a problem—the need for a market solution to some real human quandary—and then design a market and associated contracts to solve the problem. They are using financial and economic theory to create “trades” that leave people better off. In so doing they are humanizing finance and making it more relevant to human welfare. Sometimes these people are called financial engineers, since what they do seems analogous to what mechanical or electrical engineers do. At their best, market designers have the same practical common sense and drive to create, and the same grasp of basic science, that successful engineers have.

Alvin Roth is a professor ...

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