The unreasonable effectiveness of optimal transport in economics
Alfred Galichon
TL;DR
Optimal transport is a versatile mathematical framework increasingly used in economics for modeling matching, quantile regression, discrete choice, and trade, offering new algorithms and generalizations.
Contribution
The paper reviews the foundational theory of optimal transport and highlights its diverse applications and extensions in economic modeling.
Findings
Optimal transport effectively models matching with transfers.
It enables new algorithms for discrete choice models.
It generalizes the gravity model in trade economics.
Abstract
Optimal transport has become part of the standard quantitative economics toolbox. It is the framework of choice to describe models of matching with transfers, but beyond that, it allows to: extend quantile regression; identify discrete choice models; provide new algorithms for computing the random coefficient logit model; and generalize the gravity model in trade. This paper offer a brief review of the basics of the theory, its applications to economics, and some extensions.
Peer Reviews
No public reviews on file for this paper yet. If you reviewed it on a platform where reviews are public (OpenReview, ICLR, NeurIPS, ICML), you can paste yours below so the community can read it here.
Videos
No videos yet. Explain this paper in a talk, walkthrough, or lecture? Add one.
Taxonomy
TopicsGame Theory and Voting Systems · Economic theories and models · Consumer Market Behavior and Pricing
MethodsGravity