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Dynamic matching with transfers

Author

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  • Maxey, Tyler

Abstract

I study a two-sided market of dynamic matching with sequential arrivals. Agents trade off waiting to match with a more desirable agent with immediately matching with a less desirable agent. I study the consequences of transfer availability for two protocols: first-in-first-out (FIFO) and last-in-first-out (LIFO). For FIFO, welfare is weakly greater with transfers than without. For LIFO, there is a range of waiting costs such that welfare is weakly lower with transfers than without. For sufficiently low waiting costs, the equilibrium welfare for FIFO with transfers remains strictly lower than socially optimal. Thus, unlike in a static matching setting, transfers in my dynamic matching setting do not generate utilitarian efficient outcomes.

Suggested Citation

  • Maxey, Tyler, 2023. "Dynamic matching with transfers," Economics Letters, Elsevier, vol. 233(C).
    • Handle: RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523003919
    DOI: 10.1016/j.econlet.2023.111366
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    More about this item

    Keywords

    Dynamic Matching; Matching with Transfers; Mechanism Design;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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