Title

Paying to Match: Decentralized Markets with Information Frictions

Author(s)

Marina Agranov Marina Agranov (California Institute of Technology)

Ahrash Dianat Ahrash Dianat (University of Essex)

Larry Samuelson Larry Samuelson (Yale University)

Leeat Yariv 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.

Creation Date

2021-01

Section URL ID

Paper Number

2021-74

URL

http://lyariv.mycpanel.princeton.edu//papers/MatchingInfo.pdf

File Function

Jel

C78, D82, D83

Keyword(s)

matching, incomplete information, stability, experiments

Suppress

false

Series

13