Thickness and Information in Dynamic Matching Markets
63 Pages Posted: 15 Feb 2014 Last revised: 9 Jan 2019
Date Written: December 2018
We introduce a simple model of dynamic matching in networked markets, where agents arrive and depart stochastically, and the composition of the trade network depends endogenously on the matching algorithm. Varying the timing properties of matching algorithms can substantially affect their performance, and this depends crucially on the information structure. More precisely, if the planner can identify agents who are about to depart, then waiting to thicken the market substantially reduces the fraction of unmatched agents. If the planner cannot identify such agents, then matching agents greedily is close-to-optimal. We specify conditions under which local algorithms that choose the right time to match agents, but do not exploit the global network structure, are close-to-optimal. 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.
Keywords: Market Design, Matching, Networks, Continuous-time Markov Chains, Mechanism Design
JEL Classification: D47, C78, C60
Suggested Citation: Suggested Citation