How to Use Prices for Efficient Online Matching
Theoretical Economics
2026-04-15 v1
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.
Cite
@article{arxiv.2604.12181,
title = {How to Use Prices for Efficient Online Matching},
author = {Terence Highsmith},
journal= {arXiv preprint arXiv:2604.12181},
year = {2026}
}