Making Marketplaces Safe: Dominant Individual Rationality and Applications to Market Design

Often market designers cannot force agents to join a marketplace rather than using pre-existing institutions. We propose a new desideratum for marketplace design that guarantees the safety of participation: dominant individual rationality (DIR). A marketplace is DIR if every pre-existing strategy is weakly dominated by some strategy within the marketplace. We study applications to the design of labor markets and the sharing economy. We also provide a general construction to achieve approximate DIR across a wide range of marketplace designs. This paper was accepted by Yan Chen, decision analysis.

• 저널Management Science · 67(6) · 3694–3713
• 토픽Game Theory and Voting Systems · Economics and Econometrics
• DOI10.1287/mnsc.2020.3643
• 저자Benjamin Roth, Ran I. Shorrer