Welfare Effects of Dynamic Matching: An Empirical Analysis

Abstract Allocating resources without monetary payments is expected to yield inefficient allocations. Theory suggests that introducing rationing when resources are allocated repeatedly over time can mitigate this issue, while the magnitude of the resulting efficiency gains is an empirical question in most settings. We study a dynamic assignment mechanism used by the Michigan Department of Natural Resources to allocate bear hunting licenses and find that it yields a more efficient allocation than static mechanisms, allocating participants to types of resources for which they have a higher value without crowding out participants with a high overall value for hunting. Our empirical analysis also highlights the importance of heterogeneity across participants and across allocated resources for determining the efficiency of a dynamic allocation mechanism.