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Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

  • M. Bumin Yenmez

I study the consistency of incentive compatibility with several stability notions for a one-to-one matching market with transfers. Ex post stability, studied in the matching literature, is too strong to be satisfied together with incentive compatibility. Therefore, I introduce weaker stability notions: ex ante stability and interim stability. Although ex ante stability is consistent with incentive compatibility when agents are ex ante identical or when the market is balanced, interim stability can only be satisfied when there is one agent on the short side of the market, as in auctions. Which stability is appropriate depends on when agents can block.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.4.120
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 5 (2013)
Issue (Month): 4 (November)
Pages: 120-41

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Handle: RePEc:aea:aejmic:v:5:y:2013:i:4:p:120-41
Note: DOI: 10.1257/mic.5.4.120
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  1. Roth, Alvin, 2008. "Deferred Acceptance Algorithms: History, Theory, Practice, and Open Questions," Scholarly Articles 2579651, Harvard University Department of Economics.
  2. Alcalde, Jose & Barbera, Salvador, 1994. "Top Dominance and the Possibility of Strategy-Proof Stable Solutions to Matching Problems," Economic Theory, Springer, vol. 4(3), pages 417-35, May.
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  10. Ehlers, Lars & Masso, Jordi, 2007. "Incomplete information and singleton cores in matching markets," Journal of Economic Theory, Elsevier, vol. 136(1), pages 587-600, September.
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