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Payoff Equivalence of Efficient Mechanisms in Large Matching Markets

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  • Yeon Koo Che
  • Olivier Tercieux

Abstract

We study Pareto efficient mechanisms in matching markets when the number of agents is large and individual preferences are randomly drawn from a class of distributions, allowing for both common and idiosyncratic shocks. We show that, as the market grows large, all Pareto efficient mechanisms -- including top trading cycles, serial dictatorship, and their randomized variants -- are uniformly asymptotically payoff equivalent “up to the renaming of agents,” yielding the utilitarian upper bound in the limit. This result implies that, when the conditions of our model are met, policy makers need not discriminate among Pareto efficient mechanisms based on the aggregate payoff distribution of participants.
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Suggested Citation

  • Yeon Koo Che & Olivier Tercieux, 2015. "Payoff Equivalence of Efficient Mechanisms in Large Matching Markets," Levine's Bibliography 786969000000001049, UCLA Department of Economics.
    • Handle: RePEc:cla:levrem:786969000000001049
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    2. Ortega, Josué & Klein, Thilo, 2023. "The cost of strategy-proofness in school choice," Games and Economic Behavior, Elsevier, vol. 141(C), pages 515-528.
    3. Arnaud Z. Dragicevic, 2021. "Emergence and Dynamics of Short Food Supply Chains," Networks and Spatial Economics, Springer, vol. 21(1), pages 31-55, March.
    4. Akyol, Ethem, 2023. "Inefficiency of Random Serial Dictatorship under incomplete information," Journal of Economic Theory, Elsevier, vol. 213(C).
    5. Liu, Ce, 2023. "Stability in repeated matching markets," Theoretical Economics, Econometric Society, vol. 18(4), November.
    6. Julien Combe & Olivier Tercieux & Camille Terrier, 2022. "The Design of Teacher Assignment: Theory and Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(6), pages 3154-3222.
    7. Ce Liu, 2020. "Stability in Repeated Matching Markets," Papers 2007.03794, arXiv.org, revised Mar 2021.
    8. Hai Nguyen & Thành Nguyen & Alexander Teytelboym, 2021. "Stability in Matching Markets with Complex Constraints," Management Science, INFORMS, vol. 67(12), pages 7438-7454, December.
    9. Ashlagi, Itai & Nikzad, Afshin, 2020. "What matters in school choice tie-breaking? How competition guides design," Journal of Economic Theory, Elsevier, vol. 190(C).

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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