An Experimental Study on Decentralized Networked Markets

Margherita Comola (1, 2, 3) , Marcel Fafchamps (4)

1 PSE - Paris School of Economics
2 PJSE - Paris Jourdan Sciences Economiques
3 RITM - Réseaux Innovation Territoires et Mondialisation
4 Stanford University

We design a laboratory experiment to investigate matching in a decentralized market of deferred acceptance. Agents are undifferentiated and may have multiple partners; their payoff depends on who they match with. The experiment is designed in such a way that a stable configuration exists, but cannot be eyeballed by the participants due to the computational complexity of the game. In spite of this, subjects are remarkably good at reaching a stable match, even when the payoffs of others are not publicly observed. More information does, however, speed up convergence thanks to self-censoring. We trace irrational matching choices mostly to two sources: the tendency of over-think in a setting where strategic thinking is not necessary, and the reluctance to accept matching offers from those who have been disloyal in the past.

Mots clés: Information; Loyalty; Decentralized matching; Deferred acceptance

Domaines: Economies et finances

Margherita Comola, Marcel Fafchamps. An Experimental Study on Decentralized Networked Markets. Journal of Economic Behavior and Organization, 2018, 145, pp.567 - 591. ⟨10.1016/j.jebo.2017.10.013⟩. ⟨halshs-01630366⟩