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Publications
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  • June 2021
  • Article
  • Management Science

Making Marketplaces Safe: Dominant Individual Rationality and Applications to Market Design

By: Benjamin N. Roth and Ran I. Shorrer
  • Format:Print
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Abstract

Often market designers cannot force agents to join a marketplace rather than using pre-existing institutions. We propose a new desideratum for marketplace design that guarantees the safety of participation: Dominant Individual Rationality (DIR). A marketplace is DIR if every pre-existing strategy is weakly dominated by some strategy within the marketplace. We study applications to the design of labor markets and the sharing economy. We also provide a general construction to achieve approximate DIR across a wide range of marketplace designs.

Keywords

Dominant Individual Rationality; Market Design; Safety

Citation

Roth, Benjamin N., and Ran I. Shorrer. "Making Marketplaces Safe: Dominant Individual Rationality and Applications to Market Design." Management Science 67, no. 6 (June 2021).
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About The Author

Benjamin N. Roth

Entrepreneurial Management
→More Publications

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More from the Authors
  • What Do Impact Investors Do Differently? By: Shawn A. Cole, Leslie Jeng, Josh Lerner, Natalia Rigol and Benjamin N. Roth
  • Does the Invisible Hand Efficiently Guide Entry and Exit? Evidence from a Vegetable Market Experiment in India By: Abhijit Banerjee, Greg Fischer, Dean Karlan, Matt Lowe and Benjamin N. Roth
  • Social Protection and Social Distancing During the Pandemic: Mobile Money Transfers in Ghana By: Dean Karlan, Matt Lowe, Robert Osei, Isaac Osei-Akoto, Benjamin N. Roth and Christopher Udry
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