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Paying to Match: Decentralized Markets with Information Frictions

Author

Listed:
  • Marina Agranov

    (California Institute of Technology)

  • Ahrash Dianat

    (University of Essex)

  • Larry Samuelson

    (Yale University)

  • Leeat Yariv

    (Princeton University)

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

  • Marina Agranov & Ahrash Dianat & Larry Samuelson & Leeat Yariv, 2021. "Paying to Match: Decentralized Markets with Information Frictions," Working Papers 2021-74, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2021-74
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    File URL: http://lyariv.mycpanel.princeton.edu//papers/MatchingInfo.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    matching; incomplete information; stability; experiments;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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