Optimal dynamic matching

Mariagiovanna Baccara, Sang Mok Lee, Leeat Yariv

Research output: Contribution to journalArticle

Abstract

We study a dynamic matching environment where individuals arrive sequentially. There is a trade-off between waiting for a thicker market, allowing for higher-quality matches, and minimizing agents' waiting costs. The optimal mechanism cumulates a stock of incongruent pairs up to a threshold and matches all others in an assortative fashion instantaneously. In discretionary settings, a similar protocol ensues in equilibrium, but expected queues are inefficiently long. We quantify the welfare gain from centralization, which can be substantial, even for low waiting costs. We also evaluate welfare improvements generated by alternative priority protocols.

Original languageEnglish (US)
Pages (from-to)1221-1278
Number of pages58
JournalTheoretical Economics
Volume15
Issue number3
DOIs
StatePublished - Jul 1 2020

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Keywords

  • C61
  • C78
  • child adoption
  • D47
  • Dynamic matching
  • market design
  • mechanism design
  • organ donation

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