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Application Costs and Congestion in Matching Markets

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  • He, Yinghua
  • Magnac, Thierry

Abstract

A matching market often requires recruiting agents, or ``programs,'' to costly screen ``applicants,'' and congestion increases with the number of applicants to be screened. We investigate the role of application costs: Higher costs reduce congestion by discouraging applicants from applying to certain programs; however, they may harm match quality. In a multiple-elicitation experiment conducted in a real-life matching market, we implement variants of the Gale-Shapley Deferred-Acceptance mechanism with different application costs. Our experimental and structural estimates show that a (low) application cost effectively reduces congestion without harming match quality.

Suggested Citation

  • He, Yinghua & Magnac, Thierry, 2017. "Application Costs and Congestion in Matching Markets," TSE Working Papers 17-870, Toulouse School of Economics (TSE), revised Feb 2019.
    • Handle: RePEc:tse:wpaper:32279
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    Citations

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    Cited by:

    1. Thierry Magnac, 2018. "Quels étudiants pour quelles universités ? Analyses empiriques de mécanismes d’allocation centralisée," Revue économique, Presses de Sciences-Po, vol. 69(5), pages 683-708.
    2. Thilo Klein & Robert Aue & Josue Ortega, 2020. "School choice with independent versus consolidated districts," Papers 2006.13209, arXiv.org, revised Jul 2024.
    3. Emil Chrisander & Andreas Bjerre-Nielsen, 2023. "Why Do Students Lie and Should We Worry? An Analysis of Non-truthful Reporting," Papers 2302.13718, arXiv.org, revised Mar 2023.
    4. Hayri A. Arslan, 2021. "Preference estimation in centralized college admissions from reported lists," Empirical Economics, Springer, vol. 61(5), pages 2865-2911, November.
    5. YingHua He & Shruti Sinha & Xiaoting Sun, 2021. "Identification and Estimation in Many-to-one Two-sided Matching without Transfers," Papers 2104.02009, arXiv.org, revised Jul 2023.
    6. Aue, Robert & Klein, Thilo & Ortega, Josué, 2020. "What happens when separate and unequal school districts merge?," ZEW Discussion Papers 20-032, ZEW - Leibniz Centre for European Economic Research.
    7. Tobias Lehmann & Camille Terrier & Rafael Lalive, 2023. "Costs and Benefits of Congestion in Two-Sided Markets: Evidence from the Dating Market," Working Papers 964, Queen Mary University of London, School of Economics and Finance.
    8. Andreas Bjerre-Nielsen & Emil Chrisander, 2022. "Voluntary Information Disclosure in Centralized Matching: Efficiency Gains and Strategic Properties," Papers 2206.15096, arXiv.org.
    9. Mylius, F., 2023. "Why Personal Ties (Still) Matter: Referrals and Congestion," Cambridge Working Papers in Economics 2356, Faculty of Economics, University of Cambridge.

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    More about this item

    Keywords

    Gale-Shapley Deferred Acceptance Mechanism; Costly Preference Formation; Screening; Stable Matching; Congestion; Matching Market Design;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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