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Matching through position auctions

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  • Johnson, T.R.
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    Abstract

    Using a mechanism design framework, we characterize how a profit-maximizing intermediary can design matching markets when each agent is privately informed about his quality as a partner. Sufficient conditions are provided that ensure a version of positive assortative matching (what we call truncated positive assortative matching) maximizes profits. Under these conditions, all-pay position auctions always implement the profit-maximizing allocation. Winners-pay position auctions, however, only do so in sufficiently large markets.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 148 (2013)
    Issue (Month): 4 ()
    Pages: 1700-1713

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    Handle: RePEc:eee:jetheo:v:148:y:2013:i:4:p:1700-1713

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    Web page: http://www.elsevier.com/locate/inca/622869

    Related research

    Keywords: Matching; Auctions; Mechanism design; Intermediation;

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    References

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    1. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2005. "The Theory of Assortative Matching Based on Costly Signals," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 85, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    2. Simon Board, 2007. "Monopolistic Group Design with Peer Effects," Working Papers tecipa-276, University of Toronto, Department of Economics.
    3. R. Preston McAfee, 2002. "Coarse Matching," Econometrica, Econometric Society, vol. 70(5), pages 2025-2034, September.
    4. Jeremy Bulow & Jonathan Levin, 2005. "Matching and Price Competition," NBER Working Papers 11506, National Bureau of Economic Research, Inc.
    5. Ettore Damiano & Hao Li, 2007. "Price discrimination and efficient matching," Economic Theory, Springer, vol. 30(2), pages 243-263, February.
    6. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    7. Gary S. Becker, 1974. "A Theory of Marriage: Part II," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 11-26 National Bureau of Economic Research, Inc.
    8. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    9. Heidrun Hoppe & Benny Moldovanu & Emre Ozdenoren, 2011. "Coarse matching with incomplete information," Economic Theory, Springer, vol. 47(1), pages 75-104, May.
    10. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    11. repec:cup:cbooks:9780521496032 is not listed on IDEAS
    12. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
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