Abstract
Short-lived buyers arrive to a platform over time and randomly match with sellers. The sellers stay at the platform and sequentially 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 novel method of calculus of variations.
Keywords
cream skimming, matching markets, market failure, information design, calculus of variations;
JEL codes
- C73: Stochastic and Dynamic Games • Evolutionary Games • Repeated Games
- C78: Bargaining Theory • Matching Theory
- D82: Asymmetric and Private Information • Mechanism Design
- D83: Search • Learning • Information and Knowledge • Communication • Belief
Reference
Alex Smolin, and Gleb Romanyuk, “Cream Skimming and Information Design in Matching Markets”, American Economic Journal: Microeconomics, vol. 11, n. 2, May 2019, pp. 250–276.
Published in
American Economic Journal: Microeconomics, vol. 11, n. 2, May 2019, pp. 250–276