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Decentralized Dynamics in Transferable-Utility Matching Markets

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Abstract:
We consider simple, payoff-driven adjustment behaviors that humans display when interacting in low-information environments. We then study the resulting decentralized learning dynamics for the classic assignment game with transferable utility. At random points in time firms and workers match, break up, and re-match in the search for better opportunities. Agents have no knowledge of other agents’ strategies, payoffs, or the structure of the game, and there is no central authority with such knowledge either. We propose a simple learning process that converges to stable and optimal outcomes (the core). A variant of the process, where sometimes the firms exhibit greater price stickiness than the workers and at other times the reverse holds, is shown to converge in polynomial time. If payoffs are perturbed a subset of the core with a natural equity interpretation is selected.

Type of Seminar:
Control Seminar Series
Speaker:
Dr. Heinrich H. Nax and Dr. Bary S.R. Pradelski
ETH Zurich
Date/Time:
Nov 28, 2016   15:15
Location:

LFW E 11
Contact Person:

Sabrina Baumann
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Biographical Sketch:
Heinrich, game theorist and economist, previously at LSE, Oxford, ENS-PSE and JHU, studies Evolutionary Game Theory and Experimental Economics applied to markets and social norms. Bary is a game theorist who is interested in game theory, distributed learning, bounded rationality, and stochastic processes. To date his work considered the problems of convergence, convergence rate and equilibrium selection for different cooperate and non-cooperative games. Bary recently joined ETH Zurich as a post-doctoral researcher. He previously studied Mathematics at the TU Munich, Ecole Polytechnique Paris, and Oxford University where he completed his Dphil.