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What price stability? Social welfare in matching markets

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  • Boudreau, James W.
  • Knoblauch, Vicki

Abstract

In two-sided matching markets, stability can be costly. We define social welfare functions for matching markets and use them to formulate a definition of the price of stability. We then show that it is common to find a price tag attached to stability, and that the price of stability can be substantial. Therefore, when choosing a matching mechanism, a social planner would be well advised to weigh the price of stability against the value of stability, which varies from market to market.

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Bibliographic Info

Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 67 (2014)
Issue (Month): C ()
Pages: 27-33

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Handle: RePEc:eee:matsoc:v:67:y:2014:i:c:p:27-33

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Web page: http://www.elsevier.com/locate/inca/505565

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  1. Bettina Klaus & Flip Klijn, 2007. "Fair and efficient student placement with couples," International Journal of Game Theory, Springer, vol. 36(2), pages 177-207, October.
  2. Bettina Klaus & Flip Klijn, 2006. "Median Stable Matching for College Admissions," International Journal of Game Theory, Springer, vol. 34(1), pages 1-11, April.
  3. Klaus, Bettina & Klijn, Flip, 2008. "Smith and Rawls Share a Room: Stability and Medians," Research Memorandum 009, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. Hanna W. Halaburda, 2008. "Unravelling in Two-Sided Matching Markets and Similarity of Preferences," Harvard Business School Working Papers 09-068, Harvard Business School.
  5. Unver, M. Utku, 2001. "Backward unraveling over time: The evolution of strategic behavior in the entry level British medical labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 1039-1080, June.
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  7. Jeremy Bulow & Jonathan Levin, 2006. "Matching and Price Competition," American Economic Review, American Economic Association, vol. 96(3), pages 652-668, June.
  8. Onur Kesten, 2010. "School Choice with Consent," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1297-1348, August.
  9. Balinski, Michel & Sonmez, Tayfun, 1999. "A Tale of Two Mechanisms: Student Placement," Journal of Economic Theory, Elsevier, vol. 84(1), pages 73-94, January.
  10. James Boudreau & Vicki Knoblauch, 2013. "Preferences and the price of stability in matching markets," Theory and Decision, Springer, vol. 74(4), pages 565-589, April.
  11. M. Utku Ünver, 2001. "On the Survival of Some Unstable Two-Sided Matching Mechanisms," Experimental 0111001, EconWPA, revised 01 Nov 2003.
  12. James W. Boudreau & Vicki Knoblauch, 2008. "Marriage Matching and Intercorrelation of Preferences," Working papers 2008-27, University of Connecticut, Department of Economics.
  13. Smith, John H, 1973. "Aggregation of Preferences with Variable Electorate," Econometrica, Econometric Society, vol. 41(6), pages 1027-41, November.
  14. Bettina-Elisabeth Klaus, 2008. ""Fair Marriages:" An Impossibility," Harvard Business School Working Papers 09-053, Harvard Business School.
  15. Antonio Romero-Medina, 2001. "`Sex-Equal' Stable Matchings," Theory and Decision, Springer, vol. 50(3), pages 197-212, May.
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