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Preferences and the price of stability in matching markets

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  • James Boudreau
  • Vicki Knoblauch

Abstract

This paper studies welfare tradeoffs in two-sided, one-to-one matching markets. We begin by providing theoretical upper bounds on a utilitarian price of stability, and show that these bounds vary with the composition of participants’ ordinal preference lists. We then turn to simulation experiments to describe how changes in basic characteristics of agents’ preferences can increase or decrease the average price of stability as measured by both utilitarian and Rawlsian welfare criteria. Our results indicate that markets featuring moderate degrees of correlation and positive intercorrelation in the preferences of participants exhibit the steepest tradeoffs between stability and utilitarian welfare and between stability and Rawlsian welfare. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • 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.
    • Handle: RePEc:kap:theord:v:74:y:2013:i:4:p:565-589
    DOI: 10.1007/s11238-012-9319-2
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    References listed on IDEAS

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    Cited by:

    1. Steven, Brams & Marc, Kilgour, 2013. "Two-Sided Matchings: An Algorithm for Ensuring They Are Minimax and Pareto-Optimal," MPRA Paper 48113, University Library of Munich, Germany.
    2. Karpov, Alexander, 2016. "Preference diversity orderings," Working Papers 0610, University of Heidelberg, Department of Economics.
    3. Boudreau, James W. & Knoblauch, Vicki, 2014. "What price stability? Social welfare in matching markets," Mathematical Social Sciences, Elsevier, vol. 67(C), pages 27-33.
    4. SangMok Lee & Leeat Yariv, 2018. "On the Efficiency of Stable Matchings in Large Markets," Working Papers 2018-4, Princeton University. Economics Department..
    5. Alexander Karpov, 2017. "Preference Diversity Orderings," Group Decision and Negotiation, Springer, vol. 26(4), pages 753-774, July.

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    More about this item

    Keywords

    Price of stability; Matching; C78; D63; C63;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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