Contract Development in a Matching Market: The Case of Kidney Exchange
We analyze a new transplant innovation — Advanced Donation, referred to by some as a kidney “gift certificate,” “layaway plan,” or “voucher — as a case study offering insights on both market and contract development. Advanced Donation provides an unusual window into the evolution of the exchange of a single good — a kidney for transplantation — from gift, to simple barter, to exchange with a temporal separation of obligations that relies solely on trust and reputational constraints for enforcement, to a complex matching market in which the parties rely, at least in part, on formal contract to define and clarify their obligations to each other.
The transplant community, however, has historically viewed formal contracts in the transplant setting with discomfort, and that traditional discomfort remains evident in current Advanced Donation practice. We conclude that the use of formal contracts in Advanced Donation is likely inadvertent, and the contracts, in a number of ways, are inadequate to tackle the complex, nonsimultaneous exchange of kidneys in which patients donate a kidney before their intended recipients have been matched with a potential donor.