Matching strategic agents on a two-sided platform

Masaki Aoyagi; Seung Han Yoo

doi:10.1016/j.geb.2022.06.007

Matching strategic agents on a two-sided platform

Masaki Aoyagi, Seung Han Yoo

Department of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.

Original language	English
Pages (from-to)	271-296
Number of pages	26
Journal	Games and Economic Behavior
Volume	135
DOIs	https://doi.org/10.1016/j.geb.2022.06.007
Publication status	Published - 2022 Sept

Keywords

Assortative
Revenue maximization
Screening
Subscription
Two-sided market

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.geb.2022.06.007

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title = "Matching strategic agents on a two-sided platform",

abstract = "A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.",

keywords = "Assortative, Revenue maximization, Screening, Subscription, Two-sided market",

author = "Masaki Aoyagi and Yoo, {Seung Han}",

note = "Funding Information: We are grateful to seminar participants at various universities for their comments on earlier drafts, and to the Associate Editor and two anonymous referees for very useful feedback. Aoyagi acknowledges financial support from the JSPS (grant numbers: 21653016 , 24653048 , 15K13006 , 22330061 , 15H03328 , 15H05728 , and 20H05631 ), the Joint Usage/Research Center at ISER, Osaka University , and the International Joint Research Promotion Program of Osaka University . Yoo acknowledges financial support from a Korea University research grant. Part of this research was conducted while Yoo was visiting ISER, Osaka University. The paper was formerly circulated under the title “Matching Platforms”. Publisher Copyright: {\textcopyright} 2022 The Author(s)",

year = "2022",

month = sep,

doi = "10.1016/j.geb.2022.06.007",

language = "English",

volume = "135",

pages = "271--296",

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AU - Yoo, Seung Han

N1 - Funding Information: We are grateful to seminar participants at various universities for their comments on earlier drafts, and to the Associate Editor and two anonymous referees for very useful feedback. Aoyagi acknowledges financial support from the JSPS (grant numbers: 21653016 , 24653048 , 15K13006 , 22330061 , 15H03328 , 15H05728 , and 20H05631 ), the Joint Usage/Research Center at ISER, Osaka University , and the International Joint Research Promotion Program of Osaka University . Yoo acknowledges financial support from a Korea University research grant. Part of this research was conducted while Yoo was visiting ISER, Osaka University. The paper was formerly circulated under the title “Matching Platforms”. Publisher Copyright: © 2022 The Author(s)

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N2 - A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.

AB - A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.

KW - Assortative

KW - Revenue maximization

KW - Screening

KW - Subscription

KW - Two-sided market

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DO - 10.1016/j.geb.2022.06.007

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VL - 135

SP - 271

EP - 296

JO - Games and Economic Behavior

JF - Games and Economic Behavior

ER -

Matching strategic agents on a two-sided platform

Abstract

Keywords

ASJC Scopus subject areas

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