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Matching through position auctions

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  • Johnson, T.R.

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.

Suggested Citation

  • Johnson, T.R., 2013. "Matching through position auctions," Journal of Economic Theory, Elsevier, vol. 148(4), pages 1700-1713.
    • Handle: RePEc:eee:jetheo:v:148:y:2013:i:4:p:1700-1713
    DOI: 10.1016/j.jet.2013.04.009
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    Cited by:

    1. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    2. Ashwin Kambhampati & Carlos Segura‐Rodriguez, 2022. "The optimal assortativity of teams inside the firm," RAND Journal of Economics, RAND Corporation, vol. 53(3), pages 484-515, September.
    3. Hafalir, Isa & Miralles, Antonio, 2015. "Welfare-maximizing assignment of agents to hierarchical positions," Journal of Mathematical Economics, Elsevier, vol. 61(C), pages 253-270.
    4. Gomes, Renato & Pavan, Alessandro, 2016. "Many-to-many matching and price discrimination," Theoretical Economics, Econometric Society, vol. 11(3), September.
    5. Gomes, Renato & Pavan, Alessandro, 2019. "Price Customization and Targeting in Matching Markets," CEPR Discussion Papers 12936, C.E.P.R. Discussion Papers.
    6. Widmer, Tobias & Leukel, Joerg, 2016. "Efficiency of electronic service allocation with privately known quality," European Journal of Operational Research, Elsevier, vol. 255(3), pages 856-868.
    7. Daniel Fershtman & Alessandro Pavan, 2022. "Matching auctions," RAND Journal of Economics, RAND Corporation, vol. 53(1), pages 32-62, March.
    8. Utgoff, Naomi, 2020. "Implementation of assortative matching under incomplete information," Journal of Economic Theory, Elsevier, vol. 188(C).
    9. Ashwin Kambhampati & Carlos Segura-Rodriguez, 2020. "The Optimal Assortativity of Teams Inside the Firm," PIER Working Paper Archive 20-018, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    10. Naomi Utgoff, 2022. "Informational Hold Up and Intermediaries," Games, MDPI, vol. 13(5), pages 1-14, September.
    11. Tobias Widmer & Paul Karaenke & Vijayan Sugumaran, 2021. "Two‐sided service markets: Effects of quality differentiation on market efficiency," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 588-604, April.
    12. Dizdar, Deniz & Moldovanu, Benny, 2016. "On the importance of uniform sharing rules for efficient matching," Journal of Economic Theory, Elsevier, vol. 165(C), pages 106-123.
    13. Terence R. Johnson, 2019. "Synchronized matching with incomplete information," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 67(3), pages 589-616, April.
    14. Trégouët, Thomas, 2015. "Gender-based price discrimination in matching markets," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 34-45.
    15. Yan, Haomin, 2021. "Position auctions with multi-unit demands," Games and Economic Behavior, Elsevier, vol. 127(C), pages 179-193.

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    More about this item

    Keywords

    Matching; Auctions; Mechanism design; Intermediation;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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