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Matching with Contracts

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  • John William Hatfield
  • Paul R. Milgrom

Abstract

We develop a model of matching with contracts which incorporates, as special cases, the college admissions problem, the Kelso-Crawford labor market matching model, and ascending package auctions. We introduce a new "law of aggregate demand" for the case of discrete heterogeneous workers and show that, when workers are substitutes, this law is satisfied by profit-maximizing firms. When workers are substitutes and the law is satisfied, truthful reporting is a dominant strategy for workers in a worker-offering auction/matching algorithm. We also parameterize a large class of preferences satisfying the two conditions.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 4 (September)
Pages: 913-935

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Handle: RePEc:aea:aecrev:v:95:y:2005:i:4:p:913-935

Note: DOI: 10.1257/0002828054825466
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  1. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
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  12. Lawrence M. Ausubel & Peter Cramton & Paul Milgrom, 2004. "The Clock-Proxy Auction: A Practical Combinatorial Auction Design," Papers of Peter Cramton 04mit5, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
  13. Atila Abdulkadiroglu & Tayfun Sönmez, 2003. "School Choice: A Mechanism Design Approach," American Economic Review, American Economic Association, vol. 93(3), pages 729-747, June.
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  17. Peter Cramton & Yoav Shoham & Richard Steinberg, 2004. "Combinatorial Auctions," Papers of Peter Cramton 04mit, University of Maryland, Department of Economics - Peter Cramton, revised 2004.
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  19. Milgrom, Paul, 1998. "Putting auction theory to work : the simultaneous ascending auction," Policy Research Working Paper Series 1986, The World Bank.
  20. Brewer, Paul J. & Plott, Charles R., 1996. "A binary conflict ascending price (BICAP) mechanism for the decentralized allocation of the right to use railroad tracks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 857-886, October.
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  22. Roth, Alvin E, 1986. "On the Allocation of Residents to Rural Hospitals: A General Property of Two-Sided Matching Markets," Econometrica, Econometric Society, vol. 54(2), pages 425-27, March.
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  25. Pathak, Parag A. & Abdulkadiroglu, Atila & Roth, Alvin, 2005. "The New York City High School Match," Scholarly Articles 2562765, Harvard University Department of Economics.
  26. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-50, March.
  27. Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
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  29. Alkan, Ahmet & Gale, David, 2003. "Stable schedule matching under revealed preference," Journal of Economic Theory, Elsevier, vol. 112(2), pages 289-306, October.
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