Motivated by applications where the links between market participants are maintained by strategic actors, we study networked matching markets where the links between agents are manipulable. We show that the standard notion of the core is no longer sufficient to account for the incentives of agents who control links, and provide an alternate characterization of cooperative outcomes. When links are owned by third-parties, stable outcomes may not exist. However, if the market is competitive \textit{and} links are owned by the involved participants, stable outcomes are guaranteed to exist.

The recommendation principle asserts that a sender can, without loss of generality, restrict attention to experiments that directly recommend actions to the receiver. We study when this principle is valid in communication problems with commitment and provide a characterization of its applicability in terms of the convexity of the set of posteriors for which each action is optimal. Our characterization yields a simple sufficiency test for the applicability of the recommendation principle. The test implies existing applications of the recommendation principle in the literature as immediate corollaries and extends its validity beyond standard environments, including cases in which the receiver’s utility is not linear in the posterior or depends on the distribution over posteriors generated by the experiment.

[Online Appendix]

We study a dynamic model of public housing allocation in which stochastically arriving units with building-specific priorities are matched to applicants with preferences over buildings and move-in times. Since public housing authorities must assign units without knowing future arrivals, we adopt an interim perspective that evaluates outcomes using only the information available at the time of each assignment. An acyclic priority structure characterizes the existence of a mechanism that is strategy-proof, interim Pareto efficient, and eliminates interim justified envy. We show sufficiency by proposing the Choice-Based Waiting List (CBWL), a novel mechanism with these properties. We establish that the implementation of the CBWL has theoretical and empirical advantages for public housing authorities. First, we show that the most commonly used mechanisms are neither interim Pareto efficient nor free of interim justified envy. Second, simulations combining administrative data with stated-preference estimates suggest that adopting CBWL would improve welfare by \$2,700--\$5,000 per applicant across ten large US housing authorities. Finally, we show that no mechanism can achieve ex post efficiency and fairness simultaneously and establish a lower bound on the number of possible efficiency or fairness failures, which grows linearly with the applicant pool.

[Online Appendix]

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. 

[slides]