In this paper, I analyze a decentralized search and matching economy with transferable utility composed of heterogeneous agents. I explore whether Becker's assortative matching result generalizes to an economy where agents engage in costly search. In an economy with explicit additive search costs, complementarities in joint production (supermodularity of the joint production function) lead to assortative matching. This is in contrast to previous literature, which had shown that in a search economy with discounting, assortative matching may fail even when the joint production function is supermodular. Copyright The Econometric Society 2006.

Abstract.In a two-sided search market agents are paired to bargain over a unit surplus. The matching market serves as an endogenous outside option for agents in a bargaining relationship. Behavioral agents are (strategically inflexible) commitment types that demand a constant portion of the unit surplus. The steady state frequency of behavioral types in the market is determined in equilibrium. We show, even if behavioral types are negligible, they substantially effect the terms of trade and efficiency. In an unbalanced market where the entering flow of one side is short, bargaining follows equilibrium play in a bargaining game with one-sided reputation, the terms of trade are determined by the commitment types on the short side, and commitment types improve efficiency. In a balanced market where the entering flows of the two sides are equal, bargaining follows equilibrium play in a bargaining game with two-sided reputation and commitment types cause inefficiency. An inefficient equilibrium with persistent delays and break-ups is constructed. The magnitude of inefficiency is determined by the inflexible demands of the commitment types and is independent of the fraction of the commitment types entering the market.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Keywords: Auctions, Large markets, Information Aggregation AUCTIONS, ACTIONS, AND THE FAILURE OF INFORMATION AGGREGATION Alp E. Atakan and Mehmet EkmekciDate: October 10, 2012.We study a market in which k identical and indivisible objects are allocated using a uniform-price auction where n > k bidders each demand one object. Before the auction, each bidder receives an informative but imperfect signal about the state of the world. The good that is auctioned is a common-value object for the bidders, and a bidder's valuation for the object is determined jointly by the state of the world and an action that he chooses after winning the object but before he observes the state. We show that there are equilibria in which the auction price is completely uninformative about the state of the world and aggregates no information even in an arbitrarily large auction. In the equilibrium that we construct, because prices do not aggregate information, agents have strict incentives to acquire costly information before they participate in the market. Also, market statistics other than price, such as the amount of rationing and bid distributions contain extra information about the state. Our findings sharply contrast with past work which shows that in large auctions where there is no ex-post action, the auction price aggregates information.

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