Events

Abstract: We study a decentralized matching market modeled as one round of the immediate acceptance algorithm where each applicant sends q applications to firms. Our game emulates matching markets under time constraints: agents who are unmatched after the round remain unmatched. We analyze how these markets suffer from congestion: some firms do not receive applications (an issue of coverage), and some applicants receive multiple offers (an issue of collisions). We draw connections between market primitives, including the number of agents and levels of utility correlation, and the extent of congestion in the market. More applications do not alleviate congestion and optimal quotas are typically small (in our main environments, q  ≤ 3). In contrast to market-clearing analyses, we show that better screening and more correlated preferences can increase congestion and reduce match rates, highlighting the tradeoff between match quality, congestion, and rationalizing strict application limits.

The Economic Theory Lunchtime Workshops are convened by Meg Meyer.