Stability and efficiency in decentralized two-sided markets with weak preferences / by Radoslav S. Raykov.: FB3-5/2017-4E-PDF

"Many decentralized markets are able to attain a stable outcome despite the absence of acentral authority. A stable matching, however, need not be efficient if preferences are weak. This raises the question whether a decentralized market with weak preferences can attain Pareto efficiency in the absence of a central matchmaker. I show that when agent tastes are independent, the random stable match in a large-enough market is asymptotically Pareto efficient even with weak preferences. In fact, even moderate-sized markets can attain good efficiency levels. The average fraction of agents who can Pareto improve is below 10% in a market of size n = 79 when one side of the market has weak preferences; when both sides have weak preferences, the inefficiency falls below 10% for n > 158. This implies that approximate Pareto efficiency is attainable in a decentralized market even in the absence of a central matchmaker"--Abstract, p. ii.

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Publication information
Department/Agency Bank of Canada.
Title Stability and efficiency in decentralized two-sided markets with weak preferences / by Radoslav S. Raykov.
Series title Bank of Canada staff working paper, 1701-9397 ; 2017-4
Publication type Series - View Master Record
Language [English]
Format Electronic
Electronic document
Note(s) "February 2017."
Includes bibliographical references.
Includes abstract in French.
Publishing information [Ottawa] : Bank of Canada, 2017.
Author / Contributor Raykov, Radoslav S.
Description ii, 36 p.
Catalogue number
  • FB3-5/2017-4E-PDF
Subject terms Markets
Modelling
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