Profit-maximizing matchmaker

Chiu Yu Ko and Hideo Konishi

Games and Economic Behavior, 2012, vol. 75, issue 1, 217-232

Abstract: This paper considers a resource allocation mechanism that utilizes a profit-maximizing auctioneer/matchmaker in the Kelso–Crawford (1982) (many-to-one) assignment problem. We consider general and simple (individualized price) message spaces for firmsʼ reports following Milgrom (2010). We show that in the simple message space, (i) the matchmakerʼs profit is always zero and an acceptable assignment is achieved in every Nash equilibrium, and (ii) the sets of stable assignments and strong Nash equilibria are equivalent. By contrast, in the general message space, the matchmaker may make a positive profit in a Nash equilibrium. This shows that restricting message space not only reduces the information requirement but also improves resource allocation.

Keywords: Two-sided matching problem; Resource allocation problem; Stable assignment; Strong Nash equilibrium; Core; Menu auction game; Implementation; Simplified mechanism (search for similar items in EconPapers)
JEL-codes: C71 C72 C78 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S089982561100145X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Profit-Maximizing Matchmaker (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:75:y:2012:i:1:p:217-232

DOI: 10.1016/j.geb.2011.08.017

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().