Decentralized Matching Platforms : Design and Welfare

I study the relationship between a matching platform's design and users' welfare. Increasing users' number of prospects has a positive choice effect (users are more likely to find a desirable partner) and a negative competition effect (users are less likely to match). The interaction of choice and competition effects has three significant consequences. First, welfare is not strictly increasing but is single-peaked in users' number of prospects, leading to ambiguous platform network effects. Second, market sides even out in size through agents' optimal enrollment decisions. Finally, a designer generally fails to maximize users' welfare and platform enrollment simultaneously