Making marketplaces safe: Dominant individual rationality and applications to market design

Benjamin N. Roth, Ran I. Shorrer

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish (US)
Pages (from-to)3694-3713
Number of pages20
JournalManagement Science
Volume67
Issue number6
DOIs
StatePublished - Jun 2021

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research

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