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Learning by matching

Author

Listed:
  • Chen, Yi-Chun

    (Department of Economics, National University of Singapore)

  • Hu, Gaoji

    (School of Economics, Shanghai University of Finance and Economics)

Abstract

This paper studies a stability notion and matching processes in the job market with incomplete information on the workers' side. Each worker is associated with a type, and each firm cares about the type of her employee under a match. Moreover, firms' information structure is described by partitions over possible worker type profiles. With this firm-specific information, we propose a stability notion which, in addition to requiring individual rationality and no blocking pairs, captures the idea that the absence of rematching conveys no further information. When an allocation is not stable under the status quo information structure, a new pair of an allocation and an information structure will be derived. We show that starting from an arbitrary allocation and an arbitrary information structure, the process of allowing randomly chosen blocking pairs to rematch, accompanied by information updating, will converge with probability one to an allocation that is stable under the updated information structure. Our results are robust with respect to various alternative learning patterns.

Suggested Citation

  • Chen, Yi-Chun & Hu, Gaoji, 2020. "Learning by matching," Theoretical Economics, Econometric Society, vol. 15(1), January.
    • Handle: RePEc:the:publsh:3088
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    References listed on IDEAS

    as
    1. Lauermann, Stephan & Nöldeke, Georg, 2014. "Stable marriages and search frictions," Journal of Economic Theory, Elsevier, vol. 151(C), pages 163-195.
    2. George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2017. "Premuneration Values and Investments in Matching Markets," Economic Journal, Royal Economic Society, vol. 127(604), pages 2041-2065, September.
    3. Alvin Roth, 2008. "Deferred acceptance algorithms: history, theory, practice, and open questions," International Journal of Game Theory, Springer;Game Theory Society, vol. 36(3), pages 537-569, March.
    4. Emiliya Lazarova & Dinko Dimitrov, 2017. "Paths to stability in two-sided matching under uncertainty," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(1), pages 29-49, March.
    5. Bo Chen & Satoru Fujishige & Zaifu Yang, 2010. "Decentralized Market Processes to Stable Job Matchings with Competitive Salaries," KIER Working Papers 749, Kyoto University, Institute of Economic Research.
    6. Ma, Jinpeng, 1996. "On Randomized Matching Mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 377-381, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

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    2. Wang, Fujin & Zhao, Zhibin & Zhai, Zhi & Guo, Yanjie & Xi, Huan & Wang, Shibin & Chen, Xuefeng, 2023. "Feature disentanglement and tendency retainment with domain adaptation for Lithium-ion battery capacity estimation," Reliability Engineering and System Safety, Elsevier, vol. 230(C).
    3. Kenny Peng & Nikhil Garg, 2024. "Wisdom and Foolishness of Noisy Matching Markets," Papers 2402.16771, arXiv.org.

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    More about this item

    Keywords

    Two-sided matching; incomplete information; stability; learning-blocking path; convergence;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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