Principals Matching Agents: Applications to Organizations and Auctions

44 Pages Posted: 13 Apr 2023

See all articles by Bo Cowgill

Bo Cowgill

Columbia University - Columbia Business School

Jonathan Davis

University of Chicago - Harris School of Public Policy; University of Chicago - Harris School of Public Policy

B. Pablo Montagnes

Emory University - Department of Political Science

Date Written: March 29, 2023

Abstract

We develop a principal/agent model for matching agents in two-sided assignments. A principal has preferences over all agents' assignments, and agents have privately-known preferences about their own match (but are indifferent about others'). Unhappy agents can quit, but the principal can stop agents from trading assignments and can pay targeted transfers to agents to induce retention. We show that the principal values flexibility from agents to accommodate other players' interests. The principal therefore pays each side information rent over all their productive match partners (including for pairs that are ultimately not chosen). This induces truthful revelation on all productive dimensions (on both sides), and the principal can choose her preferred allocation (given constraints). The mechanism can be interpreted as a scoring auction. We conclude by discussing applications to job assignments within organizations, and extensions to other multi-sided mechanism design problems.

Keywords: matching, productivity, team formation, organizational design, market design, mechanism design

JEL Classification: C78, D47, D20, L29, D82

Suggested Citation

Cowgill, Bo and Davis, Jonathan and Montagnes, B. Pablo, Principals Matching Agents: Applications to Organizations and Auctions (March 29, 2023). Available at SSRN: https://ssrn.com/abstract=4398819 or http://dx.doi.org/10.2139/ssrn.4398819

Bo Cowgill (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Jonathan Davis

University of Chicago - Harris School of Public Policy ( email )

1155 E 60th St
Chicago, IL 60637
United States

University of Chicago - Harris School of Public Policy ( email )

1155 E 60th St
Chicago, IL 60637
United States

B. Pablo Montagnes

Emory University - Department of Political Science ( email )

Atlanta, GA 30322
United States

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