Assignment markets: Theory and experiments

Arthur Dolgopolov, Daniel Houser, Cesar Martinelli and Thomas Stratmann

European Economic Review, 2024, vol. 165, issue C

Abstract: We experimentally test convergence to the core in two-sided markets for heterogeneous indivisible goods under different trading institutions. We use bargaining and strategic games as predictors that naturally generalize the core, accommodating non-equilibrium behavior. The performance of the competing theories reflects the differences in trading procedures—market outcomes are close to Nash equilibrium predictions under auction-like institutions and close to bargaining for institutions that feature decentralized negotiations. This difference may be driving the documented effect of fewer no-trade outcomes at the expense of a higher chance of suboptimal match under free-form bargaining.

Keywords: Assignment; Laboratory experiment; Competitive equilibrium; Bargaining (search for similar items in EconPapers)
Date: 2024
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Working Paper: Assignment Markets: Theory and Experiments (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:165:y:2024:i:c:s0014292124000679

DOI: 10.1016/j.euroecorev.2024.104738

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