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  4. May 2017
  5. Pandora's Auctions: Dynamic Matching with Unknown Preferences

Pandora's Auctions: Dynamic Matching with Unknown Preferences

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Abstract

Matching theory typically assumes that agents know their values for possible partners and confines attention to settings in which matching is either static, or driven by population dynamics. In many environments of interest, instead, dynamics originate in the agents learning their preferences through interactions with other agents. In this short paper, we illustrate how platforms can use appropriately designed auctions to account for the joint value of experimentation and cross-subsidization in dynamic matching markets. The model is a stylized version of the general one in Fershtman and Pavan (2016).

Citation

Fershtman, Daniel, and Alessandro Pavan. 2017. "Pandora's Auctions: Dynamic Matching with Unknown Preferences." American Economic Review, 107 (5): 186-90. DOI: 10.1257/aer.p20171043

Additional Materials

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • D11 Consumer Economics: Theory
  • D44 Auctions