Market Design and Participation: Comprehensive Design for Matching Markets

Introduction

Market Design combines theoretical and empirical methods to design, analyze, and enhance real-world assignment markets. Many of these markets involve limited or no monetary transfers: civil servants (e.g., teachers), daycare placement for children, organ allocation for patients, and so on.

Market Interactions

These markets often interact with external opportunities or themselves over time. For example:

1. A patient in need of a kidney may have multiple treatment options.
2. Families must choose from various childcare alternatives.
3. Public school teachers may request multiple transfers throughout their careers.

However, we have limited knowledge about how these multiple opportunities interact with the assignment procedure. Incorporating such options into the design of these markets is challenging due to data limitations as well as the complexity of the models.

Project Objectives

The MADPART project aims to address these challenges by understanding and improving the design of assignment markets in the presence of outside options. It has two primary objectives:

1. Investigating how outside options discourage market participation and undermine policy objectives, specifically exploring how participation-blind procedures contribute to these losses.
2. Identifying novel and innovative designs that enhance the functioning of these markets.

Methodology

This will be achieved through the combination of advanced theoretical models and cutting-edge empirical methods. The project will leverage unique and novel datasets from four assignment markets:

• The allocation of public school teachers to schools.
• Children to public daycares.
• Kidneys to patients.
• Social housing allocation.

These markets exhibit dynamic interactions with external options.

Expected Outcomes

The outcomes of the project will give a more comprehensive and deeper understanding of assignment markets and potentially lead to significant policy innovations.