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Incentives in decentralized random matching markets

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  • Pais, Joana

Abstract

Decentralized markets are modeled by means of a sequential game where, starting from any matching situation, firms are randomly given the opportunity to make job offers. In this random context, we prove the existence of ordinal subgame perfect equilibria where firms act according to a list of preferences. Moreover, every such equilibrium preserves stability for a particular profile of preferences. In particular, when firms best reply by acting truthfully, every equilibrium outcome is stable for the true preferences. Conversely, when the initial matching is the empty matching, every stable matching can be reached as the outcome of an ordinal equilibrium play of the game.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 64 (2008)
Issue (Month): 2 (November)
Pages: 632-649

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Handle: RePEc:eee:gamebe:v:64:y:2008:i:2:p:632-649

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Matching markets Stability Random mechanisms;

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References

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  1. Dipjyoti Majumdar & Arunava Sen, 2004. "Ordinally Bayesian Incentive Compatible Voting Rules," Econometrica, Econometric Society, vol. 72(2), pages 523-540, 03.
  2. Joana Pais, 2006. "Random Matching in the College Admissions Problem," Working Papers Department of Economics 2006/13, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  3. Roth, Alvin E., 1984. "Misrepresentation and stability in the marriage problem," Journal of Economic Theory, Elsevier, vol. 34(2), pages 383-387, December.
  4. Roth, Alvin E & Xing, Xiaolin, 1997. "Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 284-329, April.
  5. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
  6. Roth, Alvin E, 1984. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 991-1016, December.
  7. Guillaume Haeringer & Myrna Wooders, 2003. "Decentralized job matching," Working Papers 40, Barcelona Graduate School of Economics.
  8. Blum, Yosef & Roth, Alvin E. & Rothblum, Uriel G., 1997. "Vacancy Chains and Equilibration in Senior-Level Labor Markets," Journal of Economic Theory, Elsevier, vol. 76(2), pages 362-411, October.
  9. Muriel Niederle & Alvin E Roth, 2003. "Unraveling Reduces Mobility in a Labor Market: Gastroenterology with and without a Centralized Match," Levine's Working Paper Archive 506439000000000428, David K. Levine.
  10. Roth, Alvin E & Vande Vate, John H, 1991. "Incentives in Two-Sided Matching with Random Stable Mechanisms," Economic Theory, Springer, vol. 1(1), pages 31-44, January.
  11. Joana Pais, 2006. "On Random Matching Markets: Properties and Equilibria," Working Papers Department of Economics 2006/11, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  12. Dipjyoti Majumdar, 2003. "Ordinally Bayesian Incentive Compatible Stable Matchings," Working Papers 05001, Concordia University, Department of Economics.
  13. 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.
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Citations

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Cited by:
  1. Horstschräer, Julia, 2012. "Decentralizing university admission: Evidence from a natural experiment," ZEW Discussion Papers 12-076, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Joana Pais, 2008. "Random matching in the college admissions problem," Economic Theory, Springer, vol. 35(1), pages 99-116, April.
  3. Joana Pais, 2006. "On Random Matching Markets: Properties and Equilibria," Working Papers Department of Economics 2006/11, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  4. Guillaume Haeringer & Myrna Wooders, 2003. "Decentralized job matching," Working Papers 40, Barcelona Graduate School of Economics.
  5. Alexey Kushnir, 2010. "Harmful Signaling in Matching Markets," Working Papers 2010.121, Fondazione Eni Enrico Mattei.
  6. Muriel Niederle & Leeat Yariv, 2009. "Decentralized Matching with Aligned Preferences," NBER Working Papers 14840, National Bureau of Economic Research, Inc.

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