Pandora's Auctions: Dynamic Matching with Unknown Preferences
Daniel Fershtman, Alessandro Pavan
American Economic Review · 2017 · Volume 107 · Issue 5
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).
Keywords
Bargaining Theory, Matching Theory, Consumer Economics: Theory, Auctions
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