Dynamic Matching Market Design

Mohammad Akbarpour

Becker-Friedman Institute, University of Chicago

Shengwu Li

Stanford University - Department of Economics

Shayan Oveis Gharan

University of California, Berkeley

August 31, 2015

We introduce a model of dynamic matching in networked markets. Agents arrive and depart stochastically, and the composition of the trade network depends endogenously on the matching algorithm. We show that if the planner can identify agents who are about to depart, then waiting to thicken the market is highly valuable, and if the planner cannot identify such agents, then matching agents greedily is close to optimal. We characterize the optimal waiting time as a function of waiting costs. The planner’s decision problem in our model involves a combinatorially complex state space. However, we show that simple local algorithms that choose the right time to match agents, but do not exploit the global network structure, can perform close to complex optimal algorithms. Finally, we consider a setting where agents have private information about their departure times, and design a continuous-time dynamic mechanism to elicit this information.

Number of Pages in PDF File: 74

Keywords: Market Design, Matching, Networks, Continuous-time Markov Chains, Mechanism Design

JEL Classification: D47, C78, C60

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Date posted: February 15, 2014 ; Last revised: September 5, 2015

Suggested Citation

Akbarpour, Mohammad and Li, Shengwu and Oveis Gharan, Shayan, Dynamic Matching Market Design (August 31, 2015). Available at SSRN: http://ssrn.com/abstract=2394319 or http://dx.doi.org/10.2139/ssrn.2394319

Contact Information

Mohammad Akbarpour (Contact Author)
Becker-Friedman Institute, University of Chicago ( email )
1101 East 58th Street
Chicago, IL 60637
United States
Shengwu Li
Stanford University - Department of Economics ( email )
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
HOME PAGE: http://www.stanford.edu/~shengwu/
Shayan Oveis Gharan
University of California, Berkeley ( email )
Berkeley, CA
United States
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