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Using classroom games to teach core concepts in market design, matching theory, and platform theory

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  • Nungsari, Melati
  • Flanders, Sam

Abstract

Market design uses various economic tools, such as game theory and experimental analysis, to aid in the design, implementation, and the fixing of broken markets whenever needed. One application of market design is to study two-sided matching markets, such as marriage and labor markets. Market design and matching theory also relate to the study of platforms (i.e., profit-maximizing intermediaries who serve to connect two or more “sides” of people) such as Amazon, Netflix, and Airbnb. In this paper, we explore some of the core concepts in understanding market design, matching theory, and platforms, and we outline three classroom games with detailed instructions for instructors who may want to explore these topics in their own classes and curricula. The first game studies market thickness, market segmentation, and their use by platforms. The second game explores the ideas of preferences, differentiation, and search frictions to explore how positive assortative mating has had negative consequences for income inequality in the U.S. in recent history. The third game studies the function of algorithms in the design and operations of a platform and presents a game that teaches the Gale-Shapley algorithm, together with a supplementary handout for classroom activities, to further strengthen students’ understanding of this seminal algorithm. The games are flexible and can be implemented for a variety of levels of study, including an undergraduate introductory economics class, an upper-level undergraduate elective, or an MBA economics course covering topics relating to platform design and management.

Suggested Citation

  • Nungsari, Melati & Flanders, Sam, 2020. "Using classroom games to teach core concepts in market design, matching theory, and platform theory," International Review of Economics Education, Elsevier, vol. 35(C).
    • Handle: RePEc:eee:ireced:v:35:y:2020:i:c:s1477388020300177
    DOI: 10.1016/j.iree.2020.100190
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    1. Lina Ma & Wanying Zhao & Longzhu Dong & Yushen Du, 2023. "Platforms Competition: An Ecosystem-View Analysis Based on Evolutionary Game Theory," SAGE Open, , vol. 13(4), pages 21582440231, December.

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    More about this item

    Keywords

    Games; Market design; Classroom games; Matching; Inequality; Platforms; Economics education;
    All these keywords.

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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