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Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

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  • M. Bumin Yenmez

Abstract

I study the consistency of incentive compatibility with several stability notions for a one-to-one matching market with transfers. Ex post stability, studied in the matching literature, is too strong to be satisfied together with incentive compatibility. Therefore, I introduce weaker stability notions: ex ante stability and interim stability. Although ex ante stability is consistent with incentive compatibility when agents are ex ante identical or when the market is balanced, interim stability can only be satisfied when there is one agent on the short side of the market, as in auctions. Which stability is appropriate depends on when agents can block.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.4.120
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File URL: http://www.aeaweb.org/aej/mic/ds/november2013/2011-0088_ds.zip
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 5 (2013)
Issue (Month): 4 (November)
Pages: 120-41

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Handle: RePEc:aea:aejmic:v:5:y:2013:i:4:p:120-41

Note: DOI: 10.1257/mic.5.4.120
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  1. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
  2. Roth, Alvin, 2008. "Deferred Acceptance Algorithms: History, Theory, Practice, and Open Questions," Scholarly Articles 2579651, Harvard University Department of Economics.
  3. Dipjyoti Majumdar, 2003. "Ordinally Bayesian Incentive Compatible Stable Matchings," Working Papers 05001, Concordia University, Department of Economics.
  4. M. Bumin Yenmez, 2009. "Incentive Compatible Market Design with Applications," GSIA Working Papers 2013-E21, Carnegie Mellon University, Tepper School of Business.
  5. Jean-Jacques Laffont & David Martimort, 2000. "Mechanism Design with Collusion and Correlation," Econometrica, Econometric Society, vol. 68(2), pages 309-342, March.
  6. Forges, Francoise, 2004. "The ex ante incentive compatible core of the assignment game," Mathematical Social Sciences, Elsevier, vol. 47(2), pages 135-151, March.
  7. Chakraborty, Archishman & Citanna, Alessandro & Ostrovsky, Michael, 2010. "Two-sided matching with interdependent values," Journal of Economic Theory, Elsevier, vol. 145(1), pages 85-105, January.
  8. Roger Myerson, 2004. "Virtual utility and the core for games with incomplete information," Econometric Society 2004 North American Summer Meetings 659, Econometric Society.
  9. Pavlov, Gregory, 2008. "Auction design in the presence of collusion," Theoretical Economics, Econometric Society, vol. 3(3), September.
  10. Alcalde, J. & Barberà, S., 1992. "Top Dominance and the Possibility of Strategy-Proof Stable Solutions to Matching Problems," UFAE and IAE Working Papers 196.92, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  11. Ehlers, Lars & Masso, Jordi, 2007. "Incomplete information and singleton cores in matching markets," Journal of Economic Theory, Elsevier, vol. 136(1), pages 587-600, September.
  12. John H. Kagel & Alvin E. Roth, 2000. "The Dynamics Of Reorganization In Matching Markets: A Laboratory Experiment Motivated By A Natural Experiment," The Quarterly Journal of Economics, MIT Press, vol. 115(1), pages 201-235, February.
  13. Robert Day & Paul Milgrom, 2008. "Core-selecting package auctions," International Journal of Game Theory, Springer, vol. 36(3), pages 393-407, March.
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Cited by:
  1. M. Bumin Yenmez, 2009. "Incentive Compatible Market Design with Applications," GSIA Working Papers 2013-E21, Carnegie Mellon University, Tepper School of Business.

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