Stability and efficiency in decentralized two-sided markets with weak preferences

Arbeitspapier

Many decentralized markets are able to attain a stable outcome despite the absence of a central authority (Roth and Vande Vate, 1990). A stable matching, however, need not be efficient if preferences are weak. This raises the question whether a decentralized market with weak preferences can attain Pareto efficiency in the absence of a central matchmaker. I show that when agent tastes are independent, the random stable match in a large-enough market is asymptotically Pareto efficient even with weak preferences. In fact, even moderate-sized markets can attain good efficiency levels. The average fraction of agents who can Pareto improve is below 10% in a market of size n = 79 when one side of the market has weak preferences; when both sides have weak preferences, the inefficiency falls below 10% for n > 158. This implies that approximate Pareto efficiency is attainable in a decentralized market even in the absence of a central matchmaker.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bank of Canada Staff Working Paper ; No. 2017-4

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Bargaining Theory; Matching Theory ; Allocative Efficiency; Cost-Benefit Analysis
• Thema: Economic models

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Raykov, Radoslav S.
• Ereignis: Veröffentlichung
• (wer): Bank of Canada
• (wo): Ottawa
• (wann): 2017

Weitere Informationen

• DOI: doi:10.34989/swp-2017-4
• Handle: http://hdl.handle.net/10419/171958
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ