Matching, auctions, and market design

Matthew O. Jackson of the Department of Economics, Stanford University; the Santa Fe Institute and the Canadian Institute for Advanced Research gives an introduction to the literatures on matching, auctions and market design.

Matching, Auctions, and Market Design

April 10, 2013

Abstract:
I provide a brief introduction to the early literatures on Matching, Auctions, and Market Design.

The design of matching markets and auctions has brought economic theory and practice together. Indeed, this is an area where microeconomic theory has had its largest direct impact. This is in part because it focuses on settings where people interact according to very clearly delineated rules. Thus, the strategic interactions of the participants are relatively easy to model, and outcomes are comparatively straightforward to assess relative to the many other less structured interactions that occur in an economy. In view of this, these are arenas where economic theory has directly shaped institutions ranging from the systems by which students are assigned to public schools to the manner in which governments have auctioned to the rights to parts of the broadcast spectra in particular geographic regions.