Leeat Yariv, Princeton University
Department seminar. Leeat Yariv is a Professor at Princeton University. She will present a paper entitled "Optimal Dynamic Matching" co-authored by Mariagiovanna Baccara and SangMok Lee.
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.
Host: Bård Harstad