Cooperation, competition, and welfare in a matching market

Arbeitspapier

We investigate the welfare effect of increasing competition in an anonymous two-sided matching market, where matched pairs play an infinitely repeated Prisoner's Dilemma. Higher matching efficiency is usually considered detrimental as it creates stronger incentives for defection. We point out, however, that a reduction in matching frictions also increases welfare because more agents find themselves in a cooperative relationship. We characterize the conditions for which increasing competition increases overall welfare. In particular, this is always the case when the incentives for defection are high.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 2022/6

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Stochastic and Dynamic Games; Evolutionary Games; Repeated Games ; Bargaining Theory; Matching Theory
• Subject: Cooperation ; Prisoner's Dilemma ; Competition ; Welfare ; Matching ; Trust Building

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bester, Helmut ; Sákovics, József
• Event: Veröffentlichung
• (who): Freie Universität Berlin, School of Business & Economics
• (where): Berlin
• (when): 2022

Further information

• DOI: doi:10.17169/refubium-35308
• Handle: http://hdl.handle.net/10419/262215
• URN: urn:nbn:de:kobv:188-refubium-35594-1
• Last update: 10.03.2025, 11:43 AM CET