Market Design for Altruistic Supply: Evidence from the Lab
50 Pages Posted: 27 Mar 2016
Date Written: March 25, 2016
Volunteer supply is widespread. Yet without a price, inefficiencies occur due to suppliers’ inability to coordinate with each other and with demand. In these contexts, we propose a market clearinghouse mechanism that improves efficiency if supply is altruistically provided. The mechanism, a registry, combines aggregate demand information with suppliers’ willingness to help, and invites volunteers to help only when excess demand occurs. We experimentally study three registries with stochastic high-stake demand and heterogeneous supplier costs. We find that all three registries improve efficiency dramatically; they eliminate unneeded costly help when demand is unexpectedly low and significantly increase supply during shortages.
Keywords: Market Design, Laboratory Experiments, Volunteering, Public Goods Provision
JEL Classification: D47, D64, C93
Suggested Citation: Suggested Citation