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Incentives in decentralized random matching markets

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  • Pais, Joana

Abstract

Decentralized markets are modeled by means of a sequential game where, starting from any matching situation, firms are randomly given the opportunity to make job offers. In this random context, we prove the existence of ordinal subgame perfect equilibria where firms act according to a list of preferences. Moreover, every such equilibrium preserves stability for a particular profile of preferences. In particular, when firms best reply by acting truthfully, every equilibrium outcome is stable for the true preferences. Conversely, when the initial matching is the empty matching, every stable matching can be reached as the outcome of an ordinal equilibrium play of the game.

Suggested Citation

  • Pais, Joana, 2008. "Incentives in decentralized random matching markets," Games and Economic Behavior, Elsevier, vol. 64(2), pages 632-649, November.
  • Handle: RePEc:eee:gamebe:v:64:y:2008:i:2:p:632-649
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    References listed on IDEAS

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    1. Dipjyoti Majumdar, 2003. "Ordinally Bayesian Incentive Compatible Stable Matching," Working Papers hal-00242988, HAL.
    2. Joana Pais, 2008. "Random matching in the college admissions problem," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 35(1), pages 99-116, April.
    3. Guillaume Haeringer & Myrna Wooders, 2011. "Decentralized job matching," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(1), pages 1-28, February.
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    5. 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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    8. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
    9. Blum, Yosef & Roth, Alvin E. & Rothblum, Uriel G., 1997. "Vacancy Chains and Equilibration in Senior-Level Labor Markets," Journal of Economic Theory, Elsevier, vol. 76(2), pages 362-411, October.
    10. 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.
    11. Roth, Alvin E., 1984. "Misrepresentation and stability in the marriage problem," Journal of Economic Theory, Elsevier, vol. 34(2), pages 383-387, December.
    12. Dipjyoti Majumdar & Arunava Sen, 2004. "Ordinally Bayesian Incentive Compatible Voting Rules," Econometrica, Econometric Society, vol. 72(2), pages 523-540, March.
    13. Roth, Alvin E, 1984. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 991-1016, December.
    14. Roth, Alvin E & Vande Vate, John H, 1991. "Incentives in Two-Sided Matching with Random Stable Mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(1), pages 31-44, January.
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    Citations

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    Cited by:

    1. Wu, Qinggong, 2015. "A finite decentralized marriage market with bilateral search," Journal of Economic Theory, Elsevier, vol. 160(C), pages 216-242.
    2. Alexey Kushnir, 2009. "Matching Markets with Signals," Working Papers 2009.39, Fondazione Eni Enrico Mattei.
    3. Joana Pais, 2006. "On Random Matching Markets: Properties and Equilibria," Working Papers Department of Economics 2006/11, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    4. Joana Pais, 2008. "Random matching in the college admissions problem," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 35(1), pages 99-116, April.
    5. Guillaume Haeringer & Myrna Wooders, 2011. "Decentralized job matching," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(1), pages 1-28, February.
    6. B. Evci, 2014. "A new dynamic mechanism to the marriage problem with a variant," Working Papers wp973, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Muriel Niederle & Leeat Yariv, 2009. "Decentralized Matching with Aligned Preferences," NBER Working Papers 14840, National Bureau of Economic Research, Inc.
    8. Horstschräer, Julia, 2012. "Decentralizing university admission: Evidence from a natural experiment," ZEW Discussion Papers 12-076, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Diamantoudi, Effrosyni & Miyagawa, Eiichi & Xue, Licun, 2015. "Decentralized matching: The role of commitment," Games and Economic Behavior, Elsevier, vol. 92(C), pages 1-17.
    10. Eun Jeong Heo & Vikram Manjunath, 2017. "Implementation in stochastic dominance Nash equilibria," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 48(1), pages 5-30, January.
    11. Somouaoga BONKOUNGOU, 2016. "Pareto Dominance of Deferred Acceptance through Early Decision," Cahiers de recherche 11-2016, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    12. Joana Pais & Ágnes Pintér & Róbert F. Veszteg, 2017. "Decentralized Matching Markets With(out) Frictions: A Laboratory Experiment," Working Papers REM 2017/03, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

    More about this item

    Keywords

    Matching markets Stability Random mechanisms;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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