Policy Design in Dynamic Matching Markets

Summary

Many economic activities concerning the allocation of scarce resources cannot be analysed via usual price mechanisms, for instance because monetary prices are found ethically inappropriate. Examples are kidney donation, secondary-school allocation, and college admissions. These markets are also known popularly as markets without prices. These markets, unlike usual competitive markets, are bound to central regulation for efficiency reasons. "Economic Design" and "Matching Theory" analyse such markets.


In this project, I investigate a crucial aspect of such markets and the regulation of them via tools from matching theory. I analyse scenarios wherein preferences of agents on one side of the market change towards an exogenously given, socially favoured norm. These situations occur when agents? preferences are at first restricted by various factors, such as logistical or financial concerns. These agents may not act as they wish due to their restrictions. A policymaker may attempt to improve the situation of these agents through a new legislation (such as a financial aid for ethnic minority students, or a subsidy for travelling interns). This may lead to a change in the reported preferences of the agents towards a socially favoured preference, which all agents agree upon. Whether this change in expressed preferences actually improves the situation of the agents targeted by the policymaker, is unclear. With the wrong choice of mechanism, such legislation may result in controversial outcomes, e.g., more competition for the ethnic students, or congestion on one side of the market. So far there has been no research about the possible consequences of dynamic changes in reported preferences on market equilibria. This project will study such dynamics.


The dynamic markets within the scope of this project vary from school-choice to kidney exchange, from intern-hospital allocation to marriage problem. This project will investigate dynamic aspects of these markets with a policy-oriented approach.

Output

Chapter in book

Scientific article

Publication meant for a broad audience

Publications for the general public

  • E Boswinkel(2014): The detention problem: allocation of convicted criminals to prisons

Details

Project number

451-13-017

Main applicant

Dr. B. Can

Affiliated with

Maastricht University, School of Business and Economics (SBE), Department of Economics (AE1 & AE2)

Team members

Dr. B. Can

Duration

15/01/2014 to 05/10/2017