CAREER: Design of Matching Markets

This Faculty Early Career Development (CAREER) award will facilitate novel, operationally aware design of matching markets, such as online marketplaces for transportation and accommodations, collaborative consumption, labor, and school admissions. Matching markets allow compatible agents to match with each other for mutual benefit. Facilitating efficient marketplaces for matching requires a design approach that carefully manages the costs and benefits to participants of searching for and forming a match, as well as balancing supply and demand. This grant will contribute to the U. S. and global economy and society by enabling design of improved, 'smart' marketplaces that better enable participants in the sharing economy to find what they want. The research conducted will be interdisciplinary, involving key ideas from operations, engineering, economics and business practice. This interdisciplinary approach will lead to new intellectual developments and facilitate training of a new breed of market engineers who will design the sharing economy of the future. The educational plan involves integration of research and practical developments from new marketplaces into online and widely disseminated course materials.

The research plan has three main objectives. First, it will develop a general framework for understanding how a matching platform should best enable search for partners, as a function of market characteristics, motivated by the widespread difficulty faced by users in finding a suitable partner in many markets. Second, it will address the problem of matching when supply and demand are geographically and temporally distributed and the cost of a match increases with geographical separation between the agents, as is the case, for instance, in transportation markets. The research will leverage tools from optimal transport and queuing networks to support platform decisions on how to match agents and optimally deploy levers like pricing and recommendations to participants, to balance supply and demand and to keep costs of matching low. Third, it will extend existing mechanisms for centralized school choice and college admissions programs to effectively reassign seats when an assigned seat is vacated at a late stage in the process. Such reassignments must manage the tradeoff between the economic properties of the process design and the operational costs associated with churn resulting from reassignment.