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.
The final published version can be found at https://doi.org/10.1287/mnsc.2020.3643
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| Work Title | Making marketplaces safe: Dominant individual rationality and applications to market design |
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| License | In Copyright (Rights Reserved) |
| Work Type | Article |
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| Publication Date | December 8, 2020 |
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| Deposited | November 04, 2024 |
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