Advertisement

Decentralized matching markets with(out) frictions: a laboratory experiment

  • Joana Pais
  • Ágnes Pintér
  • Róbert F. VesztegEmail author
Original Paper
  • 46 Downloads

Abstract

In a series of laboratory experiments, we explore the impact of different market features (the level of information, search costs, and the level of commitment) on agents’ behavior and on the outcome of decentralized matching markets. In our experiments, subjects on each side of the market actively search for a partner, make proposals, and are free to accept or reject any proposal received at any time throughout the game. Our results suggest that a low information level does not affect the stability or the efficiency of the final outcome, although it boosts market activity, unless coupled with search costs. Search costs have a significant negative impact on stability and on market activity. Finally, commitment harms stability slightly but acts as a disciplinary device to market activity and is associated with higher efficiency levels of the final outcome.

Keywords

Decentralized markets Two-sided matching Stability Efficiency Laboratory experiments 

JEL Classification

C78 C91 D82 

Notes

Acknowledgements

We are thankful to the editor and two anonymous referees for comments and excellent suggestions. Joana Pais gratefully acknowledges financial support from the Fundação para a Ciência e a Tecnologia under project reference no. PTDC/IIM-ECO/4546/2014. Ágnes Pintér gratefully acknowledges financial support from the project SEJ2007-67135 and the Juan de la Cierva program of the Spanish Ministry of Science and Innovation.

Supplementary material

10683_2019_9606_MOESM1_ESM.pdf (272 kb)
Supplementary material 1 (pdf 272 KB)

References

  1. Ackerman, H., Goldberg, P.W., Mirrokni, V., Röglin, H., & Vöcking, B. (2008). Uncoordinated two-sided matching markets. In Proc. 9th ACM conference on electronic commerce (EC08) Chicago, pp. 256–263.Google Scholar
  2. Biró, P., & Norman, G. (2013). Analysis of stochastic matching markets. International Journal of Game Theory, 42, 1021–1040.CrossRefGoogle Scholar
  3. Boudreau, J. (2008). Preference structure and random paths to stability in matching markets. Economics Bulletin, 3(67), 1–12.Google Scholar
  4. Boudreau, J., & Knoblauch, V. (2010). Marriage matching and intercorrelation of preferences. Journal of Public Economic Theory, 12(3), 587–602.CrossRefGoogle Scholar
  5. Celik, O., & Knoblauch, V. (2007). Marriage matching with correlated preferences. Economics working papers, p 200716.Google Scholar
  6. Comola, M., & Fafchamps, M. (2018). An experimental study on decentralized networked markets. Journal of Economic Behavior and Organization, 145, 567–591.CrossRefGoogle Scholar
  7. Diamantoudi, E., Xue, L., & Miyagawa, E. (2015). Decentralized matching: The role of commitment. Games and Economic Behavior, 92, 1–17.CrossRefGoogle Scholar
  8. Echenique, F., & Yariv, L. (2013). An experimental study of decentralized matching. New York: Mimeo, Caltech SS.Google Scholar
  9. Echenique, F., Wilson, A. J., & Yariv, L. (2016). Clearinghouses for two-sided matching: An experimental study. Quantitative Economics, 7, 449–482.CrossRefGoogle Scholar
  10. Eriksson, K., & Strimling, P. (2009). Partner search heuristics in the lab: Stability of matchings under various preference structures. Adaptive Behavior, 17, 524–536.CrossRefGoogle Scholar
  11. Fischbacher, U. (2007). z-Tree—Zurich toolbox for readymade economic experiments—Experimenter’s manual. Experimental Economics, 2, 171–178.CrossRefGoogle Scholar
  12. Gale, D., & Shapley, L. (1962). College admissions and the stability of marriage. American Mathematical Monthly, LXIV, 9–15.CrossRefGoogle Scholar
  13. Haeringer, G., & Wooders, M. (2011). Decentralized job matching. International Journal of Game Theory, 40, 1–28.CrossRefGoogle Scholar
  14. Haruvy, E., & Ünver, U. (2007). Equilibrium selection and the role of information in repeated matching markets. Economics Letters, 94(2), 284–289.CrossRefGoogle Scholar
  15. Hoffman, M., Moeller, D., & Patuir, R. (2013). Jealousy graphs: Structure and complexity of decentralized stable matching. In Y. Chen & N. Immorlica (Eds.), WINE (pp. 263–276). Berlin: Springer.Google Scholar
  16. Kagel, J., & Roth, A. E. (2000). The dynamics of reorganization in matching markets: A laboratory experiment motivated by natural experiments. Quarterly Journal of Economics, 115, 201–235.CrossRefGoogle Scholar
  17. Knuth, D. E. (1976). Marriages stable et leurs relations avec d’autres problemes combinatoires. Les Presses de l’Université de Montréal.Google Scholar
  18. Molis, E., & Veszteg, R. F. (2010). Experimental results on the roommate problem. CORE Discussion Paper 2010011.Google Scholar
  19. Nalbantian, H., & Schotter, A. (1995). Matching and efficiency in the baseball free-agent system: An experimental examination. Journal of Labor Economics, 13, 1–3.CrossRefGoogle Scholar
  20. Niederle, M., & Yariv, L. (2009). Decentralized matching with aligned preferences. mimeo.Google Scholar
  21. Niederle, M., & Roth, A. E. (2009). Market culture: How rules governing exploding offers affect market performance. American Economic Journal: Microeconomics, 2, 199–219.Google Scholar
  22. Pais, J. (2008). Incentives in decentralized random matching markets. Games and Economic Behavior, 64, 632–649.CrossRefGoogle Scholar
  23. Rogerson, R., Shimer, R., & Wright, R. (2005). Search-theoretic models of the labor market: A survey. Journal of Economic Literature, 43, 959–988.CrossRefGoogle Scholar
  24. Roth, A. E. (1991). A natural experiment in the organization of entry-level labor markets: Regional markets for new physicians and surgeons in the United Kingdom. American Economic Review, 81, 415–440.Google Scholar
  25. Roth, A. E., & Vande Vate, J. H. (1990). Random paths to stability in two-sided matching. Econometrica, 58, 1475–1480.CrossRefGoogle Scholar

Copyright information

© Economic Science Association 2019

Authors and Affiliations

  1. 1.ISEG, UECE (Research Unit in Complexity in Economics) and REM (Research in Economics and Mathematics)Universidade de LisboaLisboaPortugal
  2. 2.Department of Economic AnalysisUniversidad Autónoma de MadridMadridSpain
  3. 3.School of Political Science and EconomicsWaseda UniversityTokyoJapan

Personalised recommendations