Matching strategic agents on a two-sided platform

Masaki Aoyagi, Seung Han Yoo

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

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 languageEnglish
Pages (from-to)271-296
Number of pages26
JournalGames and Economic Behavior
Volume135
DOIs
Publication statusPublished - 2022 Sept

Bibliographical 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:
© 2022 The Author(s)

Keywords

  • Assortative
  • Revenue maximization
  • Screening
  • Subscription
  • Two-sided market

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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