Nungsari, Melati, and Sam Flanders, 2018. “Using Classroom Experiments to Teach Market Design and Matching Theory.” Working Paper.

Sam Flanders & Melati Nungsari | ASB Faculty | Research Paper

 

Discipline: Economics

 

Abstract
Market design studies alternative mechanisms to allocate resources when standard markets fail. One application of market design is the study of two-sided matching markets such as the marriage and dating market. Market design and matching theory also relate to the study of platforms (i.e. profit-maximizing intermediaries who serve to connect two (or more) groups of people), such as Amazon, eBay, and Uber. In this paper, we outline two classroom experiments conducted in an undergraduate matching theory class with detailed instructions for readers who may want to implement the experiments in their own curriculum. The first experiment studies market thickness, market segmentation, network externalities, and their use by platforms. The second experiment explores the idea that positive assortative mating in income and education has lead to an increase in income inequality in the U.S. in recent history.