Some of the pioneering work that brought Alvin Roth the Nobel economics prize Monday began at the University of Pittsburgh, where he was the first Andrew W. Mellon Professor of Economics from 1982 to 1998.
Mr. Roth, 60, who became a professor of economics and business administration at Harvard after leaving Pitt, is sharing the prize with Lloyd Shapley, 89, professor emeritus at UCLA, for their work on matching supply and demand in a range of markets.
"I was at Pitt when some of the most exciting things in my work happened," Mr. Roth said in a telephone news conference from Stanford University, where he is a visiting professor.
He will join the Stanford faculty at the beginning of 2013.
The Royal Swedish Academy of Sciences on Monday announced the honor, which is formally known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2012. The economics prize was not included in Alfred Nobel's will in 1895 but was created in Nobel's memory in 1968.
The two will split about $1.2 million.
Mr. Shapley used cooperative game theory to study various matching methods. He and his late colleague, David Gale, are known for the Gale-Shapley algorithm, a method aimed at ensuring supply-demand matches are so good -- so stable -- that participants won't try to make their own matches outside the system.
Mr. Roth, who is known for his work in market design, was able to apply the theory in practical ways.
The research at Pitt involved the system used to match medical residents with hospitals.
The system, which relied on the Gale-Shapley algorithm, had once worked but the results became unstable with a changing market for residents.
As more women entered medical school and more potential residents married each other, the algorithm did not provide for couples to end up nearby each other. That led to couples seeking hospital matches outside of the matching process.
Mr. Roth, who had criticized the resident matching system, said he was called upon in 1995 to lead the redesign of a new algorithm.
He has since tackled other market questions, including matching kidney donors and recipients as well as students and public schools in Boston and New York City.
During his tenure, Pitt made a major investment in additional faculty that resulted in making the university a center of experimental economics.
"We were one of the first centers of experimental economics before many universities thought of the experimentation of economics," Mr. Roth said.
Lise Vesterlund, the current Andrew W. Mellon Professor of Economics at Pitt, came to the university in 2000 after working on a post-doctorate with Mr. Roth at Harvard.
"He's someone everyone in economics knows," she said. "He's a pioneer in both market design and experimental economics."
Pitt still has an experimental lab where economists can test their theories and formulas by having people make real choices on computers.
She said Mr. Roth's early work was "very theoretical," but his practical work took hold at Pitt.
"He's incredibly bright," she said of the economist who never finished high school but instead went straight to Columbia University, followed by earning master's and doctoral degrees from Stanford.
"He looks at problems from a very practical perspective and wants to improve outcomes," she said.
Onur Kesten, associate professor of economics at Carnegie Mellon University, also worked on a post-doctorate at Harvard with Mr. Roth.
He said Mr. Roth was skilled at identifying "where we can use the theory in the best way to improve the market that is suffering from problems."
He said, "The students he advised over the years, they are finding similar applications all around the world to apply these ideas."
At a Stanford news conference, Mr. Roth gave credit to others working in the field, saying the honor is "representative of a whole stream of work."
"He's a very humble person," Mr. Kesten said.
Education writer Eleanor Chute: firstname.lastname@example.org or 412-263-1955.