The Flexible-Salary Match: A proposal to increase the salary flexibility of the National Resident Matching Program

Most graduating medical students in the United States obtain hospital residencies through the National Resident Matching Program ("NRMP"; http://www.nrmp.org/). The NRMP, or "Match" as it is usually called, is a centralized procedure that begins each year with hospitals defining residency positions, including the associated salaries. Both students and hospitals then submit rankings of potential partners, taking hospitals' predetermined positions and salaries into account. A computer algorithm is then used to match students and positions, keeping the rankings secret. Students and hospitals commit themselves in advance to abide by the results. Given hospitals' positions and salaries, the computer algorithm works like Gale and Shapley's (1962) deferred-acceptance procedure, explained below, which they proposed as a model of decentralized adjustment processes in matching markets like those by which men and women sort themselves into marriages or students sort themselves into colleges. In a striking example of independent discovery, the deferred-acceptance procedure and the Match evolved separately. Their equivalence was discovered only later, in exchanges between David Gale and then-NRMP administrator Elliott Peranson (Roth (1984b, footnote 18)). (Roth and Sotomayor (1990) give an overview of matching theory, including its application to the Match.) The Match is generally agreed to be a workable and sensible way to match students and residency positions. It overcomes or mitigates some well-documented problems—unraveling of the timing of offers, misrepresentation of rankings, and recontracting, or the unwillingness of participants to abide by the results—that have arisen in decentralized professional labor markets, including the U.S. market for residencies before the Match was instituted (Roth (1984b, 2003), Roth and Peranson (1999), Niederle and Roth (2003b)). However, plaintiffs in a recent class-action antitrust suit (Jung et al. versus Association of American Medical Colleges