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Assignment markets: Theory and experiments

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  • Dolgopolov, Arthur
  • Houser, Daniel
  • Martinelli, Cesar
  • Stratmann, Thomas

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.

Suggested Citation

  • Dolgopolov, Arthur & Houser, Daniel & Martinelli, Cesar & Stratmann, Thomas, 2024. "Assignment markets: Theory and experiments," European Economic Review, Elsevier, vol. 165(C).
    • Handle: RePEc:eee:eecrev:v:165:y:2024:i:c:s0014292124000679
    DOI: 10.1016/j.euroecorev.2024.104738
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