Cream Skimming and Information Design in Matching Markets
- (pp. 250-76)
AbstractShort-lived buyers arrive to a platform over time and randomly match with sellers. The sellers stay at the platform and decide whether to accept incoming requests. The platform designs what buyer information the sellers observe before deciding to form a match. We show full information disclosure leads to a market failure because of excessive rejections by the sellers. If sellers are homogeneous, then coarse information policies are able to restore efficiency. If sellers are heterogeneous, then simple censorship policies are often constrained efficient as shown by a method of calculus of variations.
CitationRomanyuk, Gleb, and Alex Smolin. 2019. "Cream Skimming and Information Design in Matching Markets." American Economic Journal: Microeconomics, 11 (2): 250-76. DOI: 10.1257/mic.20170154
- C78 Bargaining Theory; Matching Theory
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness