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Register a new userMatching markets with middlemen under transferable utility
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This paper studies matching markets in the presence of middlemen. In our framework, a buyer-seller pair may either trade directly or use the services of a middleman; and a middleman may serve multiple buyer-seller pairs. Direct trade between a buyer and a seller is costlier than a trade mediated by a middleman. For each such market, we examine an associated cooperative game with transferable utility. First, we show that an optimal matching for a matching market with middlemen can be obtained by considering the two-sided assignment market where each buyer-seller pair is allowed to use the mediation service of the middlemen free of charge and attain the maximum surplus. Second, we prove that the core of a matching market with middlemen is always non-empty. Third, we show the existence of a buyer-optimal core allocation and a seller-optimal core allocation. In general, the core does not exhibit a middleman-optimal matching. Finally, we establish the coincidence between the core and the set of competitive equilibrium payoff vectors.
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This paper provides an introduction to structural estimation methods for matching markets with transferable utility.
We study dynamic matching in exchange markets with easy- and hard-to-match agents. A greedy policy, which attempts to match agents upon arrival, ignores the positive externality that waiting agents generate by facilitating future matchings. We prove that this trade-off between a ``thicker market and faster matching vanishes in large markets; A greedy policy leads to shorter waiting times, and more agents matched than any other policy. We empirically confirm these findings in data from the National Kidney Registry. Greedy matching achieves as many transplants as commonly-used policies (1.6% more than monthly-batching), and shorter patient waiting times.
We study the problem of matching agents who arrive at a marketplace over time and leave after d time periods. Agents can only be matched while they are present in the marketplace. Each pair of agents can yield a different match value, and the planners goal is to maximize the total value over a finite time horizon. We study matching algorithms that perform well over any sequence of arrivals when there is no a priori information about the match values or arrival times. Our main contribution is a 1/4-competitive algorithm. The algorithm randomly selects a subset of agents who will wait until right before their departure to get matched, and maintains a maximum-weight matching with respect to the other agents. The primal-dual analysis of the algorithm hinges on a careful comparison between the initial dual value associated with an agent when it first arrives, and the final value after d time steps. It is also shown that no algorithm is 1/2-competitive. We extend the model to the case in which departure times are drawn i.i.d from a distribution with non-decreasing hazard rate, and establish a 1/8-competitive algorithm in this setting. Finally we show on real-world data that a modified version of our algorithm performs well in practice.
Two-sided matching markets have long existed to pair agents in the absence of regulated exchanges. A common example is school choice, where a matching mechanism uses student and school preferences to assign students to schools. In such settings, forming preferences is both difficult and critical. Prior work has suggested various prediction mechanisms that help agents make decisions about their preferences. Although often deployed together, these matching and prediction mechanisms are almost always analyzed separately. The present work shows that at the intersection of the two lies a previously unexplored type of strategic behavior: agents returning to the market (e.g., schools) can attack future predictions by interacting short-term non-optimally with their matches. Here, we first introduce this type of strategic behavior, which we call an `adversarial interaction attack. Next, we construct a formal economic model that captures the feedback loop between prediction mechanisms designed to assist agents and the matching mechanism used to pair them. This economic model allows us to analyze adversarial interaction attacks. Finally, using school choice as an example, we build a simulation to show that, as the trust in and accuracy of predictions increases, schools gain progressively more by initiating an adversarial interaction attack. We also show that this attack increases inequality in the student population.
We study dynamic matching in an infinite-horizon stochastic market. While all agents are potentially compatible with each other, some are hard-to-match and others are easy-to-match. Agents prefer to be matched as soon as possible and matches are formed either bilaterally or indirectly through chains. We adopt an asymptotic approach and compute tight bounds on the limit of waiting time of agents under myopic policies that differ in matching technology and prioritization. We find that the market composition is a key factor in the desired matching technology and prioritization level. When hard-to-match agents arrive less frequently than easy-to-match ones (i) bilateral matching is almost as efficient as chains (waiting times scale similarly under both, though chains always outperform bilateral matching by a constant factor), and (ii) assigning priorities to hard-to-match agents improves their waiting times. When hard-to-match agents arrive more frequently, chains are much more efficient than bilateral matching and prioritization has no impact. We further conduct comparative statics on arrival rates. Somewhat surprisingly, we find that in a heterogeneous market and under bilateral matching, increasing arrival rate has a non-monotone effect on waiting times, due to the fact that, under some market compositions, there is an adverse effect of competition. Our comparative statics shed light on the impact of merging markets and attracting altruistic agents (that initiate chains) or easy-to-match agents. This work uncovers fundamental differences between heterogeneous and homogeneous dynamic markets, and potentially helps policy makers to generate insights on the operations of matching markets such as kidney exchange programs.
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