Timing in Dynamic Matching Markets: Theory and Evidence

50 Pages Posted: 6 Apr 2022

See all articles by Erdem Yenerdag

Erdem Yenerdag

Washington University in St. Louis - Department of Economics

Date Written: March 27, 2022

Abstract

We study a two sided one-to-one matching model with two periods in which agents decide to match early and exit in the first period, or to wait and search for more agents to find a match in the second period, where a stable matching is implemented for those who remain in the market. The distribution of the quality of a potential match varies over time as some agents who have found mutually agreeable matches exit the market. We show that in equilibrium: (i) similar and relatively high type pairs match early, (ii) the probability of matching early is a non-monotonic function of type, and (iii) markets do not necessarily unravel even if each meeting is costly and agents have the option to make exploding offers. We also designed experiments with real time interactions to test our theoretical predictions and provide an extensive analysis of early matching incentives in a dynamic matching environment. In the experiments, we turn on and off the possibility of matching with partners from previous periods and vary the cost of meeting in each period. We find that the results are in line with our theoretical predictions.

Keywords: Matching, incomplete information, stability, unraveling, experiments

JEL Classification: C72, C78, C90, D82

Suggested Citation

Yenerdag, Erdem, Timing in Dynamic Matching Markets: Theory and Evidence (March 27, 2022). Available at SSRN: https://ssrn.com/abstract=4067702 or http://dx.doi.org/10.2139/ssrn.4067702

Erdem Yenerdag (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

HOME PAGE: http://www.erdemyenerdag.com

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

Paper statistics

Downloads
6
Abstract Views
55
PlumX Metrics