Matching Markets with N-Dimensional Preferences
AbstractAbstract. This paper analyzes matching markets where agent types are n-vectors of characteristics--i.e. points in R^n --and agents prefer matches that are closer to them according to a distance metric on this set (horizontal preferences). First, given a few assumptions, I show that in the Gale-Shapley stable matching in this environment, agents match to a linear function of their own type. I show that restrictions on preferences are not as onerous as they may seem, as a rich variety of preference structures can be mapped into the horizontal framework. With these results in hand, I develop a highly stylized model of an online dating platform that helps consumers find and contact potential matches, where consumers have preferences over many characteristics (e.g. height, income, age, etc.) and have the option to pay to join the platform or look for a match off the platform. I characterize the firm's optimal pricing strategy and the concomitant market outcomes for consumers. Finally, I address an unanswered question in the matching literature--can multidimensional preferences be aggregated (e.g. into a univariate measure of quality) without changing the salient features of the model? I find that, in the dating platform model I introduced, consumer preferences can be aggregated without any change to firm strategy or market outcomes, providing some justification for the univariate-type matching models prevalent in the theoretical matching literature.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 53669.
Date of creation: Feb 2014
Date of revision:
Matching; Online Dating; Marriage; Family Economics; Mathematical Economics;
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D10 - Microeconomics - - Household Behavior - - - General
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-21 (All new papers)
- NEP-GTH-2014-02-21 (Game Theory)
- NEP-ICT-2014-02-21 (Information & Communication Technologies)
- NEP-MIC-2014-02-21 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Patrick Legros & Andrew F. Newman, 2002. "Beauty is a Beast, Frog is a Prince: Assortative Matching with Nontransferabilities," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-149, Boston University - Department of Economics, revised Nov 2004.
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- Klumpp, Tilman, 2009. "Two-sided matching with spatially differentiated agents," Journal of Mathematical Economics, Elsevier, vol. 45(5-6), pages 376-390, May.
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