Sorting through Search and Matching Models in Economics

Chade, Héctor; Eeckhout, Jan; Smith, Lones

doi:10.1257/jel.20150777

Cited by 141 publications

(79 citation statements)

References 139 publications

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“…In an   ×   market, (45) gives  as a weighted average of  and , where the weight on  is the probability a seller gets at least 2 buyers; in particular, in a 2 × 2 market,  = ( + ) 2, consistent with the original Nash solution.…”

Section: The Nash Programmentioning

confidence: 91%

“…Over the range  1 ∈ (0 1), we can derive  1  1 and insert it into (52), then simplify using  1 =  and  1 = 1  to verify that a deviation is not profitable iff  solves (45). Hence there is a unique symmetric equilibrium where buyers mix.…”

Section: Thementioning

confidence: 99%

“…To be fair, Montgomery solves the 2 × 2 model correctly, and acknowledges it is a "short cut" in the general case to take   as given after a seller deviates. The difference between (45) and (57) is the presence of −   −1 +    in the denominator of the former, so the Burdett et al price is higher than the Montgomery price, because it is less attractive for a seller to lower his  when he recognizes this increases buyers' utility. However, as      → ∞ holding  fixed, this consideration vanishes, so Montgomery's approach gives the right answer in large markets.…”

Section: Issues Applications and Extensionsmentioning

confidence: 99%

“…When there are non-zero continuous densities on both sides, the analysis remains tractable when it can be compressed into a differential equation, as above, but the issue of who trades with whom is more complicated. One concern in the literature is assortative matching (see Chade et al 2016 for a survey). In particular, when do we get positive (negative) assortative matching, which means higher types on one side match with higher (lower) types on the other?…”

Section: Sortingmentioning

confidence: 99%

See 3 more Smart Citations

Directed Search: A Guided Tour

Wright

Kircher

Julien³

et al. 2017

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This essay surveys the literature on directed/competitive search, covering theory and applications in, e.g., labor, housing and monetary economics. These models share features with traditional search theory, yet differ in important ways. They share features with general equilibrium theory, but with explicit frictions. Equilibria are typically efficient, in part because markets price goods plus the time required to get them. The approach is tractable and arguably realistic. Results are presented for finite and large economies. Private information and sorting with heterogeneity are analyzed. Some evidence is discussed. While emphasizing issues and applications, we also provide several hard-to-find technical results.

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Section: The Nash Programmentioning

confidence: 91%

Section: Thementioning

confidence: 99%

Section: Issues Applications and Extensionsmentioning

confidence: 99%

Section: Sortingmentioning

confidence: 99%

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Directed Search: A Guided Tour

Wright

Kircher

Julien³

et al. 2017

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“…14 Note that details of the search and matching process can matter; see Chade, Eeckhout and Smith (2017) for a discussion.…”

Section: Search and Matchingmentioning

confidence: 99%

A Theory of Sticky Rents: Search and Bargaining with Incomplete Information

Verbrugge

Gallin²

2017

Working Paper (Federal Reserve Bank of Cleveland)

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The housing rental market offers a unique laboratory for studying price stickiness. This paper is motivated by two facts: 1. Tenants' rents are remarkably sticky even though regular and expected recontracting would, by itself, suggest substantial rent fl exibility. 2. Rent stickiness varies signifi cantly across structure type; for example, detached unit rents are far stickier than large apartment unit rents. We offer the fi rst theoretical explanation of rent stickiness that is consistent with these facts. In this theory, search and bargaining with incomplete information generates stickiness in the absence of menu costs or other commonly used modeling assumptions. Tenants' valuations of their units, and whether they are considering other units, are both private information. At lease end, the behavior of risk-averse landlords differs according to the number of units managed. Multi-unit landlords, aided by the law of large numbers, exploit tenant moving costs. When renegotiating rent contracts, they set rent increases that exceed the infl ation rate; while the majority of tenants stay, those who place low value on the unit search elsewhere and leave. Landlords with one unit loathe vacancy and offer tenants the identical contract to pre-empt search; only those who really hate the unit leave.JEL Codes: C7, C78, D4, D83, D9, E3, R31.

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Time compression (dis)economies: An empirical analysis

Hawk

Pacheco‐de‐Almeida

2018

Strategic Management Journal

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Research Summary: To investigate time compression diseconomies (TCD), this study estimated time–cost elasticities using 459 oil and gas global investment projects (1997–2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks 1 month faster. About 88% of the projects exhibit negative time–cost elasticities with over 39% of unrealized economies of time compression. Only 12% of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development, and political stability are shown to be associated with greater time compression efficiency. Managerial Summary: How fast should firms invest? The conventional view is that acceleration increases market revenues but also inflates costs. However, there is no recent empirical evidence of this tradeoff. Our article systematically investigates the costs of compressing time in investment projects. Results show that most firms in the oil and gas industry are significantly time inefficient in their operations. Specifically, by accelerating investments, firms would also substantially decrease costs. We estimate the magnitude of these time inefficiencies for specific oil and gas industries and firms and study which strategies might mitigate this problem. This fine‐grained analysis should help firms assess their financial incentives to accelerate projects and prove informative to stock market analysts’ valuations of firm investment timing.

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Sorting through Search and Matching Models in Economics

Cited by 141 publications

References 139 publications

Directed Search: A Guided Tour

Directed Search: A Guided Tour

A Theory of Sticky Rents: Search and Bargaining with Incomplete Information

Time compression (dis)economies: An empirical analysis

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