Payoff Equivalence of Efficient Mechanisms in Large Matching Markets

30 Pages Posted: 1 Aug 2015

See all articles by Yeon-Koo Che

Yeon-Koo Che

Columbia University

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE)

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Date Written: July 30, 2015

Abstract

We study Pareto efficient mechanisms in matching markets when the number of agents is large and individual preferences are randomly drawn from a class of distributions, allowing for both common and idiosyncratic shocks. We show that, as the market grows large, all Pareto efficient mechanisms -- including top trading cycles, serial dictatorship, and their randomized variants -- are uniformly asymptotically payoff equivalent “up to the renaming of agents,” yielding the utilitarian upper bound in the limit. This result implies that, when the conditions of our model are met, policy makers need not discriminate among Pareto efficient mechanisms based on the aggregate payoff distribution of participants.

Keywords: Large matching markets, Pareto efficiency, Payoff equivalence

JEL Classification: C70, D47, D61, D63

Suggested Citation

Che, Yeon-Koo and Tercieux, Olivier, Payoff Equivalence of Efficient Mechanisms in Large Matching Markets (July 30, 2015). Cowles Foundation Discussion Paper No. 2014, Available at SSRN: https://ssrn.com/abstract=2638014 or http://dx.doi.org/10.2139/ssrn.2638014

Yeon-Koo Che (Contact Author)

Columbia University ( email )

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HOME PAGE: http://www.columbia.edu/~yc2271

Olivier Tercieux

Paris-Jourdan Sciences Economiques (PSE) ( email )

48, BD Jourdan
75014 Paris
France

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