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Experimental Evidence on the Behavioral (In)Efficiency of Search-and-Matching Market Institutions

Author

Listed:
  • Kenneth Chan
  • Samuel Fahim

Abstract

We design a lab experiment to study three different search-and-matching market institutions: (1) price posting with directed search, (2) bargaining with directed search, and (3) bargaining with a guaranteed match. We compare their performance in terms of market efficiency, prices of goods, and subjects’ preferences across different market institutions. We find that the price-posting market with directed search is the most efficient, has the lowest prices (a more equitable split of surpluses), and is the most preferred market institution among our experimental subjects.

Suggested Citation

  • Kenneth Chan & Samuel Fahim, 2026. "Experimental Evidence on the Behavioral (In)Efficiency of Search-and-Matching Market Institutions," Berlin School of Economics Discussion Papers 0105, Berlin School of Economics.
    • Handle: RePEc:bdp:dpaper:0105
    DOI: 10.48462/opus4-6304
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    Keywords

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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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