Optimal Dynamic Matching

65 Pages Posted: 10 Aug 2015 Last revised: 17 Jun 2018

See all articles by Mariagiovanna Baccara

Mariagiovanna Baccara

Washington University in St. Louis

SangMok Lee

University of Pennsylvania

Leeat Yariv

Princeton University

Multiple version iconThere are 2 versions of this paper

Date Written: August 9, 2015

Abstract

We study a dynamic matching environment where individuals arrive sequentially. There is a tradeoff between waiting for a thicker market, allowing for higher quality matches, and minimizing agents' waiting costs. The optimal mechanism cumulates a stock of incongruent pairs up to a threshold and matches all others in an assortative fashion instantaneously. In decentralized settings, a similar protocol ensues in equilibrium, but expected queues are inefficiently long. We quantify the welfare gain from centralization, which can be substantial, even for low waiting costs. We also evaluate welfare improvements generated by transfer schemes and by matching individuals in fixed time intervals.

Keywords: Dynamic Matching, Mechanism Design, Adoption, Kidney Exchange, Labor Markets

JEL Classification: C78, D9, E24, J1, J64

Suggested Citation

Baccara, Mariagiovanna and Lee, SangMok and Yariv, Leeat, Optimal Dynamic Matching (August 9, 2015). Available at SSRN: https://ssrn.com/abstract=2641670 or http://dx.doi.org/10.2139/ssrn.2641670

Mariagiovanna Baccara

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

SangMok Lee

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Leeat Yariv (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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