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Paying to Match: Decentralized Markets with Information Frictions

Author

Listed:
  • Yariv, Leeat
  • Agranov, Marina
  • Dianat, Ahrash
  • Samuelson, Larry

Abstract

We experimentally study decentralized one-to-one matching markets with transfers. We vary the information available to participants, complete or incomplete, and the surplus structure, supermodular or submodular. Several insights emerge. First, while markets often culminate in efficient matchings, stability is more elusive, reflecting the difficulty of arranging attendant transfers. Second, incomplete information and submodularity present hurdles to efficiency and especially stability; their combination drastically diminishes stability's likelihood. Third, matchings form "from the top down" in complete-information supermodular markets, but exhibit many more and less-obviously ordered offers otherwise. Last, participants' market positions matter far more than their dynamic bargaining styles for outcomes.

Suggested Citation

  • Yariv, Leeat & Agranov, Marina & Dianat, Ahrash & Samuelson, Larry, 2021. "Paying to Match: Decentralized Markets with Information Frictions," CEPR Discussion Papers 15637, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15637
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    References listed on IDEAS

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    1. Federico Echenique & Leeat Yariv, 2013. "An Experimental Study of Decentralized Matching," Working Papers 2013-3, Princeton University. Economics Department..
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    Cited by:

    1. He, Simin & Wu, Jiabin & Zhang, Hanzhe, 2021. "Experimental and Noncooperative Analyses of Decentralized Matching with Transfers," Working Papers 2021-2, Michigan State University, Department of Economics.

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    More about this item

    Keywords

    Matching; Incomplete information; Stability; Experiments;
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