The Three E's Market Design Scorecard
Evaluate allocation systems for efficiency, ease, and equity
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 99%
The Three E's Scorecard evaluates how well a market or allocation mechanism operates across efficiency, ease, and equity. Equity asks whether participants receive the intended degree of fair or equal treatment. Efficiency checks whether scarce resources are wasted and whether they reach people who will put them to valuable use. Ease measures the burden imposed by participation, including time, confusion, stress, and procedural complexity. Designers first define the resource and policy goal, then inspect the mechanism against each dimension. Weaknesses and trade-offs become explicit: banning resale may improve equity but leave seats empty, while first-come systems may allocate inventory but force users into stressful races. The output is a balanced redesign rather than optimization of one metric in isolation.
Origin
Extracted from Masters in Business, where Judd Kessler presented efficiency, ease, and equity as the core framing device for evaluating markets.
Core principles
- 01Equity tests whether participants receive fair treatment
- 02Efficiency tests whether resources are wasted or misallocated
- 03Ease treats participation burden as a design outcome
- 04Improving one dimension can weaken another
- 05A sound design makes trade-offs explicit
How to run it
- 1
Define the allocation objective
Specify the scarce resource, eligible participants, and the outcome the system is intended to produce.
Pro tip Distinguish stated goals from incentives created by the current rules.
Watch out Without a clear objective, fairness and efficiency cannot be evaluated coherently.
- 2
Assess equity
Examine who receives access, who bears burdens, and whether relevant participants receive equal treatment or justified priority.
Pro tip Disaggregate outcomes across socioeconomic and demographic groups.
Watch out A formally identical rule can produce unequal access when participants have unequal resources.
- 3
Assess efficiency
Look for unused resources, preventable waste, and allocations that block higher-value uses. Check whether resources can be reassigned when recipients no longer need them.
Pro tip Track vacancies, discarded inventory, and failed exchanges.
Watch out High demand does not prove that resources are reaching their best uses.
- 4
Assess ease
Measure the time, complexity, uncertainty, and stress required to participate successfully.
Pro tip Observe the process from the perspective of a first-time participant.
Watch out Do not treat waiting, repeated applications, or technical races as costless.
- 5
Map trade-offs
Identify how proposed changes affect all three dimensions rather than only the targeted problem.
Pro tip Use a simple before-and-after scorecard for each design option.
Watch out A solution that improves fairness may create waste or excessive participation burdens.
- 6
Redesign and monitor
Modify the weakest rules, then measure outcomes across all three dimensions. Iterate when participant behavior reveals unintended incentives.
Pro tip Pilot changes before applying them to an entire market.
Watch out Participants and intermediaries will adapt strategically to new rules.
In the wild
A ticketing platform can compare first-come sales with a preference-based lottery. The race may allocate every seat but advantages bots and forces fans to wait online. A verified lottery can improve equity and ease, while named tickets and a managed waitlist can preserve efficiency by returning unused tickets to genuine fans.
→ The redesigned system reduces bot advantages and participation burdens without leaving valuable seats unused.
A team examines calendar slots inherited from meetings created years earlier. It asks whether current access to staff time is fair, whether the meetings remain the best use of that time, and whether attendance and scheduling are needlessly burdensome.
→ Low-value recurring meetings are removed or reassigned, freeing scarce time for higher-priority work.
Common mistakes
Optimizing only fairness
A system can treat everyone equally while wasting resources or imposing severe burdens on every participant.
Ignoring participation costs
Time, confusion, stress, and repeated applications are real costs even when no monetary price is charged.
Missing adaptive behavior
Bots, brokers, applicants, and other participants change tactics in response to new rules and can undermine the intended design.
Is it for you?
Best for
It is best for policymakers, organizations, and platform designers distributing scarce opportunities or resources.
Not ideal for
It is not ideal when no meaningful scarcity or allocation decision exists.
From the transcript
“So the three e's are about how well a market operates”
“Equity is about fairness.”
“Efficiency is about making sure that we're not wasting any scarce resources”
From the episode
Maximizing Luck: Masters in Business with Judd Kessler
Judd Kessler