An Experimental Study on Decentralized Networked Markets

Margherita Comola () and Marcel Fafchamps

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Abstract: We design a laboratory experiment to investigate matching in a decentralized market of deferred acceptance. Agents are undifferentiated and may have multiple partners; their payoff depends on who they match with. The experiment is designed in such a way that a stable configuration exists, but cannot be eyeballed by the participants due to the computational complexity of the game. In spite of this, subjects are remarkably good at reaching a stable match, even when the payoffs of others are not publicly observed. More information does, however, speed up convergence thanks to self-censoring. We trace irrational matching choices mostly to two sources: the tendency of over-think in a setting where strategic thinking is not necessary, and the reluctance to accept matching offers from those who have been disloyal in the past.

Keywords: Information; Loyalty; Decentralized matching; Deferred acceptance (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

Published in Journal of Economic Behavior and Organization, 2018, 145, pp.567 - 591. ⟨10.1016/j.jebo.2017.10.013⟩

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Journal Article: An experimental study on decentralized networked markets (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01630366

DOI: 10.1016/j.jebo.2017.10.013

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