Working Paper: CEPR ID: DP12986
Authors: Mariagiovanna Baccara; Sangmok Lee; Leeat Yariv
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; mechanism design; organ donation; market design
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| waiting costs (J32) | welfare outcomes (I38) |
| optimal matching mechanism (C78) | welfare outcomes (I38) |
| centralized mechanism (D73) | welfare outcomes (I38) |
| frequency of desirable types (C52) | option value of waiting (J22) |
| option value of waiting (J22) | welfare gap (I30) |
| waiting costs (J32) | welfare gap (I30) |