Assortive Matching and Search
AbstractThis paper reexamines a classic insight of the assignment literature - when match- ing is assortative - in an environment with search frictions. We assume a continuum of heterogeneous agents who can produce only in pairs . If two agents form a match, they generate a ow of divisible output. We depart from the neoclassical assignment literature (e.g. Becker 1973) in assuming that match creation is time consuming: each unmatched agent faces a Poisson arrival of potential mates (Diamond 1982, Mortensen 1982, Pissarides 1990). As matching precludes further search, agents must weigh the opportunity cost of ceasing to search for better op- tions, against the benet of producing immediately.
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Bibliographic InfoPaper provided by Michigan - Center for Research on Economic & Social Theory in its series Papers with number 98-09.
Length: 29 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF MICHIGAN, DEPARTMENT OF ECONOMICS CENTER FOR RESEARCH ON ECONOMIC AND SOCIAL THEORY, ANN ARBOR MICHIGAN U.S.A.
Other versions of this item:
- Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2a, Massachusetts Institute of Technology (MIT), Department of Economics.
- Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2b, Massachusetts Institute of Technology (MIT), Department of Economics.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
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