Matching strategic agents on a two-sided platform

Masaki Aoyagi, Seung Han Yoo

Research output: Contribution to journalArticlepeer-review

Abstract

A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.

Original languageEnglish
Pages (from-to)271-296
Number of pages26
JournalGames and Economic Behavior
Volume135
DOIs
Publication statusPublished - 2022 Sep

Keywords

  • Assortative
  • Revenue maximization
  • Screening
  • Subscription
  • Two-sided market

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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