Experimental and Noncooperative Analyses of Decentralized Matching with Transfers

64 Pages Posted: 4 Jun 2020 Last revised: 9 Sep 2021

See all articles by Simin He

Simin He

Shanghai University of Finance and Economics - School of Economics

Jiabin Wu

University of Oregon - Department of Economics

Hanzhe Zhang

Department of Economics, Michigan State University

Date Written: September 9, 2021

Abstract

We experimentally and theoretically study decentralized matching markets with transfers of Shapley and Shubik (1972) and Becker (1973). Our contributions are threefold. First, our experiment shows that matching and aggregate surplus achieved are affected by whether efficient matching is assortative and whether the pairwise Nash-Rubinstein bargaining outcome (i.e., an equal split of every efficiently matched pair's surplus) is stable (i.e., in the core), neither of which is predicted to matter in the canonical theory. Second, in markets with equal numbers of participants on the two sides, individual payoffs in our and others' experiments cannot be explained by existing refinements of the core, but are consistent with our noncooperative model's unique prediction, which refines the core. Third and finally, in markets with unequal numbers of participants on the two sides, noncompetitive outcomes--that is, subjects on the long side of the market do not compete fully--are not captured by the canonical theory, but by our noncooperative model a la folk theorems.

Keywords: decentralized matching, matching with transfers, assignment games, bargaining experiments

JEL Classification: C71, C72, C78, C92

Suggested Citation

He, Simin and Wu, Jiabin and Zhang, Hanzhe, Experimental and Noncooperative Analyses of Decentralized Matching with Transfers (September 9, 2021). Available at SSRN: https://ssrn.com/abstract=3596703 or http://dx.doi.org/10.2139/ssrn.3596703

Simin He

Shanghai University of Finance and Economics - School of Economics ( email )

777 Guoding Road
Shanghai, 200433
China

Jiabin Wu

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

Hanzhe Zhang (Contact Author)

Department of Economics, Michigan State University ( email )

486 West Circle Drive
East Lansing, MI 48824
United States

HOME PAGE: http://hanzhezhang.github.io/

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