The organization of the labor market for medical interns and residents underwent a number of changes before taking its present form in 1951. The record of these changes and the problems that prompted them provides an unusual opportunity to study the forces at work in markets of this kind. The present paper begins with a brief history and then presents a game-theoretic analysis to explain the orderly operation and longevity of the current market, in contrast to the turmoil that characterized various earlier short-lived attempts to organize the market. An analysis is also given of some contemporary problems facing the market. A subsidiary theme of the paper concerns the history of ideas: the problems encountered in the organization of this market, and some of the solutions arrived at, anticipated the discussion of such issues in the literature of economics and game theory.

The organization of the labor market for medical interns and residents underwent a number of changes before taking its present form in 1951. The record of these changes and the problems that prompted them provides an unusual opportunity to study the forces at work in markets of this kind. The present paper begins with a brief history and then presents a game-theoretic analysis to explain the orderly operation and longevity of the current market, in contrast to the turmoil that characterized various earlier short-lived attempts to organize the market. An analysis is also given of some contemporary problems facing the market. A subsidiary theme of the paper concerns the history of ideas: the problems encountered in the organization of this market, and some of the solutions arrived at, anticipated the discussion of such issues in the literature of economics and game theory.

In the context of entry‐level labor markets, we consider the potential transactions that have to be evaluated before equilibrium transactions can be identified. These potential transactions involve offers that are rejected. After an initial phase in which many offers can be proffered in parallel, subsequent potential transactions must be processed serially, since a new offer cannot be made until an outstanding offer is rejected. In many, perhaps most, decentralized labor markets, this means that transactions have to be finalized before there is time for the market to clear, that is, before all the potential transactions that would need to be evaluated in order to reach a stable outcome can in fact be evaluated. This has implications for the strategic behavior of firms and workers. In particular, in deciding to whom to offer a position, a firm may have strong incentives to consider not only its preferences over workers but also the likelihood that its offer will be accepted, since if its offer is rejected it may find that many other potential employees have become unavailable in the interim. The analysis is carried out in connection with the decentralized

We conduct a lab experiment that shows that current rules regulating transplant centers (TCs) and organ-procurement organizations (OPOs) create perverse incentives that inefficiently reduce both organ recovery and beneficial transplantations. We model the decision environment with a two-player multiround game between an OPO and a TC. In the condition that simulates current rules, OPOs recover only the highest-quality kidneys and forgo valuable recovery opportunities, and TCs decline some beneficial transplants. Alternative regulations that reward TCs and OPOs together for health outcomes in their entire patient pool lead to behaviors that increase organ recovery and appropriate transplants.

The entry‐level market for American gastroenterologists was organized by a centralized clearinghouse from 1986 to 1996. Before, and since, it has been conducted via a decentralized market in which appointment dates have unraveled to well over a year before the start of employment. We find that, both before and after the years in which the centralized clearinghouse was used, gastroenterologists are less mobile and more likely to be employed at the same hospital in which they were internal medicine residents than when the clearinghouse was in use. This suggests that the clearinghouse not only coordinates the timing of appointments but also increases the scope of the market, compared to a decentralized market with early appointments.