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Monotone Equilibrium in Matching Markets with Signaling

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  • Seungjin Han
  • Alex Sam
  • Youngki Shin

Abstract

We introduce a notion of competitive signaling equilibrium (CSE) in one-to-one matching markets with a continuum of heterogeneous senders and receivers. We then study monotone CSE where equilibrium outcomes - sender actions, receiver reactions, beliefs, and matching - are all monotone in the stronger set order. We show that if the sender utility is monotone-supermodular and the receiver's utility is weakly monotone-supermodular, a CSE is stronger monotone if and only if it passes Criterion D1 (Cho and Kreps (1987), Banks and Sobel (1987)). Given any interval of feasible reactions that receivers can take, we fully characterize a unique stronger monotone CSE and establishes its existence with quasilinear utility functions.

Suggested Citation

  • Seungjin Han & Alex Sam & Youngki Shin, 2021. "Monotone Equilibrium in Matching Markets with Signaling," Papers 2109.03370, arXiv.org, revised Jan 2024.
    • Handle: RePEc:arx:papers:2109.03370
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    References listed on IDEAS

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    Cited by:

    1. Seungjin Han & Alex Sam & Youngki Shin, 2023. "Optimal Delegation in Markets for Matching with Signaling," Papers 2303.09415, arXiv.org.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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