A Resource Allocation Mechanism Using Matching and Bargaining

A resource allocation mechanism based on matching and bargaining is presented. There are many resource providers and many resource seekers. The resource valuations of the agents are private and are uniformly distributed over a common support. The regulator establishes two bid levels. Each participating agent is randomly paired with a counterpart and the allocations arise out of these bilateral encounters based on agents' individual bid choices. We show a Bayes Nash equilibrium in dominant strategy when the regulator fixes the strategy for one set of agents. The mechanism has parameters to tune the allocations.