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The Value of User-Specific Information for Two-Sided Matchmakers

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Listed:
  • Tim Brühn

    (University of Giessen)

  • Annette Meinusch

    (University of Giessen)

  • Georg Götz

    (University of Giessen)

Abstract

This paper analyzes the incentives of a monopolistic matchmaker to generate user-specific information in order to increase match-quality and profits. By merging two-sided-markets with two-sided-matching we derive a micro-foundation of cross-side externalities dependent on the number of potential matches and the accuracy-level of user-specific information. Incentives to invest into identification technologies are determined by the scalability of the (fixed) investments and the resulting effect on match-quality. We show that these effects work into opposing directions, i.e., while scalability works in favor for platforms with large customer bases, the effect of identification on match-quality is greater for small scale platforms.

Suggested Citation

  • Tim Brühn & Annette Meinusch & Georg Götz, 2014. "The Value of User-Specific Information for Two-Sided Matchmakers," MAGKS Papers on Economics 201448, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:201448
    as

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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/48-2014_bruehn.pdf
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    References listed on IDEAS

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    Keywords

    two-sided markets; two-sided matching; advertising; segmentation and identification;
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