An Approximate "Law of One Price" in Random Assignment Games

Assignment games represent a tractable yet versatile model of two-sided markets with transfers. We study the likely properties of the core of randomly generated assignment games. If the joint productivities of every firm and worker are i.i.d bounded random variables, then with high probability all workers are paid roughly equal wages, and all firms make similar profits. This implies that core allocations vary significantly in balanced markets, but that there is core convergence in even slightly unbalanced markets. For the benchmark case of uniform distribution, we provide a tight bound for the workers' share of the surplus under the firm-optimal core allocation. We present simulation results suggesting that the phenomena analyzed appear even in medium-sized markets. Finally, we briefly discuss the effects of unbounded distributions and the ways in which they may affect wage dispersion

Essays on Microeconomic Theory

This thesis contains three chapters related to the microeconomic interactions in markets. The first paper deals with markets with many participants, and in which monetary transfers are allowed, and studies core convergence. The second paper considers reputation building in time-limited negotiations. The third paper studies two-sided markets with no monetary transfers, governed by stable matching mechanisms.Business Economic

Information Effects of Jump Bidding in English Auctions

Should an auctioneer start a rising auction from some starting price or set it as a reservation price? Under what circumstances might a bidder find it rational to raise the current offer by a substantial factor instead of making just a small increase above the highest bid? This paper aims to answer both of these questions by exploring the implications of jump bidding over the information sets available to the bidders. Our motivation is to find whether hiding the information about other players' signals might be beneficial for one of the bidders. We first show that it is better for the auctioneer to set a reservation price rather than "jump" to the starting price. We then prove that in a very general setting and when bidders are risk-neutral there exist no equilibrium with jump bidding (in non-weakly dominated strategies). Finally, we demonstrate that jump bidding might be a rational consequence of risk aversion, and analyze the different effects at work.

The Large Core of College Admission Markets: Theory and Evidence

We study stable allocations in college admissions markets where students can attend the same college under different financial terms. The deferred acceptance algorithm identifies a stable allocation where funding is allocated based on merit. While merit-based stable allocations assign the same students to college, non-merit-based stable allocations may differ in the number of students assigned to college. In large markets, this possibility requires heterogeneity in applicants' sensitivity to financial terms. In Hungary, where such heterogeneity is present, a non-merit-based stable allocation would increase the number of assigned applicants by 1.9%, and affect 8.3% of the applicants relative to any merit-based stable allocation. These findings contrast sharply with findings from the matching (without contracts) literature