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Each agent in a market needs to supplement his skill with a particular skill of another agent to complete his project. A platform matches the agents and allows members of the same match to share their skills. A match is valuable to an agent if he is matched with any agent who possesses a skill complementary to his own skill. When the platform uses the divide-and-conquer pricing strategy, we study the properties of incentive compatible mechanisms in relation to the reciprocal property of the complementary relationships among different skills, and when the market expands in its size.

Each agent in a market needs to supplement his skill with a particular skill of another agent to complete his project. A platform matches the agents and allows members of the same match to share their skills. A match is valuable to an agent if he is matched with any agent who possesses a skill complementary to his own skill. When the platform uses the divide-and-conquer pricing strategy, we study the properties of incentive compatible mechanisms in relation to the reciprocal property of the complementary relationships among different skills, and when the market expands in its size.

This paper uses laboratory experiments to study subjects’ assessment of uncertainty resulting from strategic and non-strategic decisions of other players. Nonstrategic events are defined by the colors of balls drawn from urns, whereas strategic events are defined by the action choice in Stag Hunt (SH) and Prisoners’ Dilemma (PD) games. We elicit subjects’ matching probabilities and examine if they satisfy the law of probability including monotonicity and additivity. Violations from the law are observed for both uncertainty sources, but are more substantial for strategic uncertainty. In particular, we observe a coordination fallacy, a violation of monotonicity whereby the probability weight placed on a symmetric coordination profile of the games exceeds that placed on the corresponding action choice. The violation is found to be severer for an efficient coordination profile.

This paper uses a laboratory experiment to study beliefs and their relationship to action and strategy choices in finitely and indefinitely repeated prisoners' dilemma games. We find subjects' beliefs about the other player's action are accurate despite some systematic deviations corresponding to early pessimism in the indefinitely repeated game and late optimism in the finitely repeated game. The data reveals a close link between beliefs and actions that diers between the two games. In particular, the same history of play leads to dierent beliefs, and the same belief leads to different action choices in each game. Moreover, we find beliefs anticipate the evolution of behavior within a supergame, changing in response to the history of play (in both games) and the number of rounds played (in the finitely repeated game). We then use the subjects' beliefs over actions in each round to identify their beliefs over supergame strategies played by the other player. We find these beliefs correctly capture the different classes of strategies used in each game. Importantly, subjects using different strategies have dierent beliefs, and for the most part, strategies are subjectively rational given beliefs. The results also suggest subjects tend to overestimate the likelihood that others use the same strategy as them, while underestimating the likelihood that others use less cooperative strategies.