Cream Skimming and Information Design in Matching Markets

37 Pages Posted: 25 May 2018

See all articles by Gleb Romanyuk

Gleb Romanyuk

Harvard University

Alex Smolin

University of Toulouse 1 - Toulouse School of Economics (TSE)

Date Written: May 14, 2018

Abstract

Short-lived buyers arrive to a platform over time and randomly match with sellers. The sellers stay at the platform and sequentially decide whether to accept incoming requests. The platform designs what buyer information the sellers observe before deciding to form a match. We show full information disclosure leads to a market failure because of excessive rejections by the sellers. If sellers are homogeneous, then coarse information policies are able to restore efficiency. If sellers are heterogeneous, then simple censorship policies are often constrained efficient as shown by a novel method of calculus of variations.

Keywords: cream skimming, matching markets, market failure, information design, calculus of variations

JEL Classification: C73, C78, D82, D83

Suggested Citation

Romanyuk, Gleb and Smolin, Alex, Cream Skimming and Information Design in Matching Markets (May 14, 2018). Available at SSRN: https://ssrn.com/abstract=3178328 or http://dx.doi.org/10.2139/ssrn.3178328

Gleb Romanyuk

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Alex Smolin (Contact Author)

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
213
Abstract Views
740
rank
178,445
PlumX Metrics