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Networks Working Group - Matt Elliott (Economics, CALTECH and Cambridge-INET Visitor)

When Oct 31, 2014
from 01:00 PM to 02:00 PM
Where Keynes Room
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Speaker: Matt Elliott

Title: Decentralized Bargaining: Efficiency and the Core (joint with Francesco Nava)

This paper studies market clearing in matching markets. The model is non-cooperative, fully decentralized, and in Markov strategies. Workers and firms bargain with each other to determine who will be matched to whom and at what terms of trade. Once a worker-firm pair reach agreement they exit the market. Inefficiencies, mismatch and delay, arise from the strategic response to the potential evolution of the market. The main result identifies a necessary and sufficient condition for equilibrium efficiency and shows that inefficiencies
are pervasive. Mismatch is a necessary by-product of the market context affecting any bargaining outcome.