IDEAS home Printed from https://ideas.repec.org/p/pri/econom/2018-4.html
   My bibliography  Save this paper

On the Efficiency of Stable Matchings in Large Markets

Author

Listed:
  • SangMok Lee

    (Washington University)

  • Leeat Yariv

    (Princeton University)

Abstract

Stability is often the goal for matching clearinghouses, such as those matching residents to hospitals, students to schools, etc. We study the wedge between stability and utilitarian efficiency in large one-to-one matching markets. We distinguish between stable matchings’ average efficiency (or, efficiency per-person), which is maximal asymptotically for a rich preference class, and their aggregate efficiency, which is not. The speed at which average efficiency of stable matchings converges to its optimum depends on the underlying preferences. Furthermore, for severely imbalanced markets governed by idiosyncratic preferences, or when preferences are sub-modular, stable outcomes may be average inefficient asymptotically. Our results can guide market designers who care about efficiency as to when standard stable mechanisms are desirable and when new mechanisms, or the availability of transfers, might be useful.

Suggested Citation

  • SangMok Lee & Leeat Yariv, 2018. "On the Efficiency of Stable Matchings in Large Markets," Working Papers 2018-4, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2018-4
    as

    Download full text from publisher

    File URL: http://lyariv.mycpanel.princeton.edu//papers/EfficientStability.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Eric Budish & Estelle Cantillon, 2012. "The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard," American Economic Review, American Economic Association, vol. 102(5), pages 2237-2271, August.
    2. Stephan Lauermann, 2013. "Dynamic Matching and Bargaining Games: A General Approach," American Economic Review, American Economic Association, vol. 103(2), pages 663-689, April.
    3. Gunter J. Hitsch & Ali Hortaçsu & Dan Ariely, 2010. "Matching and Sorting in Online Dating," American Economic Review, American Economic Association, vol. 100(1), pages 130-163, March.
    4. Robert E. Hall & Alan B. Krueger, 2012. "Evidence on the Incidence of Wage Posting, Wage Bargaining, and On-the-Job Search," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(4), pages 56-67, October.
    5. Alvin E. Roth, 2007. "Repugnance as a Constraint on Markets," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 37-58, Summer.
    6. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    7. Itai Ashlagi & Yash Kanoria & Jacob D. Leshno, 2017. "Unbalanced Random Matching Markets: The Stark Effect of Competition," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 69-98.
    8. 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.
    9. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
    10. Alvin E. Roth, 2002. "The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics," Econometrica, Econometric Society, vol. 70(4), pages 1341-1378, July.
    11. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 11-26, Part II, .
    12. Bordon, Paola & Fu, Chao, 2015. "College-Major Choice to College-Then-Major Choice," MPRA Paper 79643, University Library of Munich, Germany.
    13. Paola Bordon & Chao Fu, 2015. "College-Major Choice to College-Then-Major Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(4), pages 1247-1288.
    14. Gary S. Becker, 1974. "A Theory of Marriage," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 299-351, National Bureau of Economic Research, Inc.
    15. Vicki Knoblauch, 2007. "Marriage Matching: A Conjecture of Donald Knuth," Working papers 2007-15, University of Connecticut, Department of Economics.
    16. Crawford, Vincent P., 1991. "Comparative statics in matching markets," Journal of Economic Theory, Elsevier, vol. 54(2), pages 389-400, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Federico Echenique & Joseph Root & Fedor Sandomirskiy, 2024. "Stable matching as transportation," Papers 2402.13378, arXiv.org.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yan Chen & Peter Cramton & John A. List & Axel Ockenfels, 2021. "Market Design, Human Behavior, and Management," Management Science, INFORMS, vol. 67(9), pages 5317-5348, September.
    2. Scott Duke Kominers & Alexander Teytelboym & Vincent P Crawford, 2017. "An invitation to market design," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(4), pages 541-571.
    3. Muriel Niederle & Alvin E. Roth, 2009. "Market Culture: How Rules Governing Exploding Offers Affect Market Performance," American Economic Journal: Microeconomics, American Economic Association, vol. 1(2), pages 199-219, August.
    4. Ortega, Josué, 2018. "Social integration in two-sided matching markets," Journal of Mathematical Economics, Elsevier, vol. 78(C), pages 119-126.
    5. Alvin E. Roth, 2009. "What Have We Learned from Market Design?," Innovation Policy and the Economy, University of Chicago Press, vol. 9(1), pages 79-112.
    6. Nikhil Agarwal & Eric Budish, 2021. "Market Design," NBER Working Papers 29367, National Bureau of Economic Research, Inc.
    7. Itai Ashlagi & Mark Braverman & Yash Kanoria & Peng Shi, 2020. "Clearing Matching Markets Efficiently: Informative Signals and Match Recommendations," Management Science, INFORMS, vol. 66(5), pages 2163-2193, May.
    8. Muriel Niederle & Alvin E. Roth, 2009. "The Effects of a Centralized Clearinghouse on Job Placement, Wages, and Hiring Practices," NBER Chapters, in: Studies of Labor Market Intermediation, pages 235-271, National Bureau of Economic Research, Inc.
    9. Davi B. Costa, 2021. "Benefits of marriage as a search strategy," Papers 2108.04885, arXiv.org, revised Aug 2021.
    10. Jacques Silber & Sasiwimon Warunsiri Paweenawat & Lusi Liao, 2022. "On the measurement of non-random mating and of its change over time," Review of Economics of the Household, Springer, vol. 20(1), pages 161-198, March.
    11. Adda, Jérôme & Pinotti, Paolo & Tura, Giulia, 2020. "There's More to Marriage than Love: The Effect of Legal Status and Cultural Distance on Intermarriages and Separations," CEPR Discussion Papers 14432, C.E.P.R. Discussion Papers.
    12. Pongou, Roland & Serrano, Roberto, 2013. "Dynamic Network Formation in Two-Sided Economies," MPRA Paper 46021, University Library of Munich, Germany.
    13. 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.
    14. Eric Budish & Estelle Cantillon, 2012. "The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard," American Economic Review, American Economic Association, vol. 102(5), pages 2237-2271, August.
    15. Abi Adams & Alison Andrew, 2019. "Preferences and beliefs in the marriage market for young brides," IFS Working Papers W19/05, Institute for Fiscal Studies.
    16. Laurens Cherchye & Bram De Rock & Frederic Vermeulen & Selma Walther, 2021. "Where did it go wrong? Marriage and divorce in Malawi," Quantitative Economics, Econometric Society, vol. 12(2), pages 505-545, May.
    17. Grosskopf, Brit & Roth, Alvin E., 2009. "If you are offered the Right of First Refusal, should you accept? An investigation of contract design," Games and Economic Behavior, Elsevier, vol. 65(1), pages 176-204, January.
    18. Mario Vozar, 2010. "The Effect of Time in a Multi-Dimensional Marriage Market Model," CERGE-EI Working Papers wp417, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    19. Ning Sun & Zaifu Yang, 2016. "A Theory of Marriage with Mutually Consented Divorces," Discussion Papers 16/14, Department of Economics, University of York.
    20. Bolton, Gary E. & Ockenfels, Axel, 2012. "Behavioral economic engineering," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 665-676.

    More about this item

    Keywords

    Matching; Stability; Efficiency; Market Design;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pri:econom:2018-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bobray Bordelon (email available below). General contact details of provider: https://economics.princeton.edu/working-papers/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.