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Matching through position auctions

  • Johnson, T.R.
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    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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    File URL: http://www.sciencedirect.com/science/article/pii/S0022053113000756
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    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
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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    1. R. Preston McAfee, 2002. "Coarse Matching," Econometrica, Econometric Society, vol. 70(5), pages 2025-2034, September.
    2. Simon Board, 2007. "Monopolistic Group Design with Peer Effects," Working Papers tecipa-276, University of Toronto, Department of Economics.
    3. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2005. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords," NBER Working Papers 11765, National Bureau of Economic Research, Inc.
    4. Damiano, Ettore & Li, Hao, 2005. "Price Discrimination and Efficient Matching," Microeconomics.ca working papers damiano-05-03-21-12-21-58, Vancouver School of Economics, revised 22 Mar 2005.
    5. Jeremy Bulow & Jonathan Levin, 2005. "Matching and Price Competition," NBER Working Papers 11506, National Bureau of Economic Research, Inc.
    6. 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.
    7. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. repec:cup:cbooks:9780521496032 is not listed on IDEAS
    9. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 253-281.
    10. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    11. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    12. Heidrun Hoppe & Benny Moldovanu & Emre Ozdenoren, 2011. "Coarse matching with incomplete information," Economic Theory, Springer, vol. 47(1), pages 75-104, May.
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