Matching through position auctions |
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Authors: | TR Johnson |
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Institution: | 917 Flanner Hall, University of Notre Dame, Notre Dame, IN 46556, United States |
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Abstract: | Using a mechanism design framework, we characterize how a profit-maximizing intermediary can design matching markets when each agent is privately informed about his quality as a partner. Sufficient conditions are provided that ensure a version of positive assortative matching (what we call truncated positive assortative matching) maximizes profits. Under these conditions, all-pay position auctions always implement the profit-maximizing allocation. Winners-pay position auctions, however, only do so in sufficiently large markets. |
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Keywords: | D44 C78 D85 |
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