Abstract
Publisher Summary The matching market (MM) institution is a two-sided auction procedure that collects bids from buyers and asks from sellers, and iteratively matches the highest remaining bid with the highest remaining ask less than or equal to it. This chapter summarizes a first laboratory experiment comparing the MM institution to the natural alternative, the uniform price (UP) or single call market.the chapter found that, compared with UP, MM has lower efficiency, has about the same average volume but greater variability, and gives sellers a smaller fraction of the surplus. Compared either to the competitive equilibrium (CE) theoretical benchmark or to the actual performance of the uniform price (UP) market institution, the MM institution fails to deliver on its main selling point: that it will generate higher trading volume. It does generate considerably more variable volume but average trading volume is quite close to the CE benchmark and to the UP average. A secondary selling point is that the MM will offer sellers a larger share of the surplus.
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