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On the importance of uniform sharing rules for efficient matching

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  • Dizdar, Deniz
  • Moldovanu, Benny

Abstract

The paper provides a possible explanation for the occurrence of uniform, fixed-proportion rules for sharing surplus in two-sided markets. We study a two-sided matching model with transferable utility where agents are characterized by privately known, multi-dimensional attributes that jointly determine the surplus of each potential partnership. We ask the following question: for what divisions of surplus within matched pairs is it possible to implement the efficient (surplus-maximizing) matching? Our main result shows that the only robust rules compatible with efficient matching are those that divide realized surplus in a fixed proportion, independently of the attributes of the pair's members: each agent must expect to get the same fixed percentage of surplus in every conceivable match. A more permissive result is obtained for one-dimensional attributes and supermodular surplus functions.

Suggested Citation

  • Dizdar, Deniz & Moldovanu, Benny, 2016. "On the importance of uniform sharing rules for efficient matching," Journal of Economic Theory, Elsevier, vol. 165(C), pages 106-123.
  • Handle: RePEc:eee:jetheo:v:165:y:2016:i:c:p:106-123
    DOI: 10.1016/j.jet.2016.04.010
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    More about this item

    Keywords

    Matching; Surplus division; Premuneration values; Interdependent values; Multi-dimensional attributes;

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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