How to Use Prices for Efficient Online Matching

Terence Highsmith

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arXiv · 2604.12181

How to Use Prices for Efficient Online Matching

Terence Highsmith

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Abstract

Many matching markets feature unknown, dynamic arrivals of agents that must match immediately. A caseworker must match an abused child to a foster home, a hospital must assign a patient in critical condition to a room, or a city must place a homeless individual into a shelter. We design an online matching algorithm -- the Sequential Equilibrium Mechanism (SEM) -- that approximates large market equilibria to match arriving agents to objects. SEM is asymptotically efficient, fair, and strategy-proof with probability one. Our application plans to deploy a lab-in-the-field experiment where real caseworkers match vulnerable children to host homes, and we provide simulation evidence that SEM can substantially improve welfare.

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Terence Highsmith. 2026-04-14. How to Use Prices for Efficient Online Matching. https://arxiv.org/abs/2604.12181

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