Journal Article10.1287/OPRE.2017.1644
Efficient Dynamic Barter Exchange
TL;DR: This work studies dynamic matching policies in a stochastic marketplace for barter, with agents arriving over time and finds that the cost outweighs the benefit from waiting to thicken the market.
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Abstract: We study dynamic matching policies in a stochastic marketplace for barter, with agents arriving over time. Each agent is endowed with an item and is interested in an item possessed by another agent homogeneously with probability p, independently for all pairs of agents. Three settings are considered with respect to the types of allowed exchanges: (a) only two-way cycles, in which two agents swap items, (b) two-way or three-way cycles, (c) (unbounded) chains initiated by an agent who provides an item but expects nothing in return. We consider the average waiting time as a measure of efficiency and find that the cost outweighs the benefit from waiting to thicken the market. In particular, in each of the above settings, a policy that conducts exchanges in a greedy fashion is near optimal. Further, for small p, we find that allowing three-way cycles greatly reduces the waiting time over just two-way cycles, and conducting exchanges through a chain further reduces the waiting time significantly. Thus, a centra...
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Citations
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TL;DR: In this article, the authors study a dynamic matching environment where individuals arrive sequentially and study a tradeoff between waiting for a thicker market, allowing for higher quality matches, and minimizing agents' waiting costs.
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