The Yale Undergraduate Research Journal
Article Title
Abstract
In a two-sided market with a broker, the broker can influence the buyer’s and seller’s optimal trading behaviour through strategic information design. We study the impact of information about waiting times on riders and drivers in a rideshare market. We consider three information regimes: the first in which no information about time is revealed, the second in which true waiting times are communicated, and finally an intermediate regime in which agents are only told whether their waiting time falls within a high or low category. We evaluate the optimality of each information regime by maximizing welfare and revenue for each setting and and that by concealing information, the broker can incentivize agents to accept less favorable trades. On the other hand, more information restricts trade to sufficiently favourable bargains, yielding higher expected welfare and expected revenue
Recommended Citation
Aggarwal, Pradhi
(2021)
"Optimal Information Design in Two-Sided Trade,"
The Yale Undergraduate Research Journal: Vol. 2:
Iss.
1, Article 8.
Available at:
https://elischolar.library.yale.edu/yurj/vol2/iss1/8