Optimal Dynamic Matching

68 Pages Posted: 18 Jun 2018 Last revised: 25 Jun 2018

See all articles by Mariagiovanna Baccara

Mariagiovanna Baccara

Washington University in St. Louis

SangMok Lee

Washington University in St. Louis

Leeat Yariv

Princeton University; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2018

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 discretionary 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 alternative priority protocols.

Keywords: Dynamic Matching, market design, mechanism design, Organ Donation

Suggested Citation

Baccara, Mariagiovanna and Lee, SangMok and Yariv, Leeat, Optimal Dynamic Matching (June 2018). CEPR Discussion Paper No. DP12986, Available at SSRN: https://ssrn.com/abstract=3198136

Mariagiovanna Baccara (Contact Author)

Washington University in St. Louis ( email )

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

SangMok Lee

Washington University in St. Louis ( email )

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

Leeat Yariv

Princeton University ( email )

Princeton, NJ 08544-1021
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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