The role of a matchmaker in buyer-vendor interactions

TL;DR

This paper models a market with heterogeneous preferences as a combinatorial matching problem, analyzing how a matchmaker influences optimal solutions, participant inequality, and the effects of preference correlations.

Contribution

It introduces a framework for understanding the role of a matchmaker in complex buyer-vendor markets with diverse preferences and compares outcomes with and without matchmaking.

Findings

Matchmaker improves overall market efficiency.

Presence of a matchmaker reduces participant inequality.

Correlations in preferences significantly impact system outcomes.

Abstract

We consider a simple market where a vendor offers multiple variants of a certain product and preferences of both the vendor and potential buyers are heterogeneous and possibly even antagonistic. Optimization of the joint benefit of the vendor and the buyers turns the toy market into a combinatorial matching problem. We compare the optimal solutions found with and without a matchmaker, examine the resulting inequality between the market participants, and study the impact of correlations on the system.