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Random decentralized market processes for stable job matchings with competitive salaries

Author

Listed:
  • Chen, Bo
  • Fujishige, Satoru
  • Yang, Zaifu

Abstract

We analyze a decentralized process in a basic labor market where finitely many heterogeneous firms and workers meet directly and randomly in pursuit of higher payoffs over time and agents may behave myopically. We find a general random decentralized market process that almost surely converges in finite time to a competitive equilibrium of the market. A key proposition en route to this result exhibits a finite sequence of successive bilateral trades from an arbitrary initial market state to a stable matching between firms and workers with a scheme of competitive salary offers.

Suggested Citation

  • Chen, Bo & Fujishige, Satoru & Yang, Zaifu, 2016. "Random decentralized market processes for stable job matchings with competitive salaries," Journal of Economic Theory, Elsevier, vol. 165(C), pages 25-36.
  • Handle: RePEc:eee:jetheo:v:165:y:2016:i:c:p:25-36
    DOI: 10.1016/j.jet.2016.04.003
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    References listed on IDEAS

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    1. Feldman, Allan M, 1974. "Recontracting Stability," Econometrica, Econometric Society, vol. 42(1), pages 35-44, January.
    2. Klaus, Bettina & Klijn, Flip, 2007. "Paths to stability for matching markets with couples," Games and Economic Behavior, Elsevier, vol. 58(1), pages 154-171, January.
    3. Green, Jerry R, 1974. "The Stability of Edgeworth's Recontracting Process," Econometrica, Econometric Society, vol. 42(1), pages 21-34, January.
    4. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-450, March.
    5. Peter Biro & Matthijs Bomhoff & Walter Kern & Petr A. Golovach & Daniel Paulusma, 2012. "Solutions for the Stable Roommates Problem with Payments," IEHAS Discussion Papers 1211, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    6. Shapley, Lloyd & Scarf, Herbert, 1974. "On cores and indivisibility," Journal of Mathematical Economics, Elsevier, vol. 1(1), pages 23-37, March.
    7. Diamantoudi, Effrosyni & Miyagawa, Eiichi & Xue, Licun, 2004. "Random paths to stability in the roommate problem," Games and Economic Behavior, Elsevier, vol. 48(1), pages 18-28, July.
    8. Ning Sun & Zaifu Yang, 2009. "A Double-Track Adjustment Process for Discrete Markets With Substitutes and Complements," Econometrica, Econometric Society, vol. 77(3), pages 933-952, May.
    9. Bo Chen & Satoru Fujishige & Zaifu Yang, 2010. "Decentralized Market Processes to Stable Job Matchings with Competitive Salaries," KIER Working Papers 749, Kyoto University, Institute of Economic Research.
    10. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
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    12. Lawrence M. Ausubel, 2006. "An Efficient Dynamic Auction for Heterogeneous Commodities," American Economic Review, American Economic Association, vol. 96(3), pages 602-629, June.
    13. Roth, Alvin E & Vande Vate, John H, 1990. "Random Paths to Stability in Two-Sided Matching," Econometrica, Econometric Society, vol. 58(6), pages 1475-1480, November.
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    1. repec:jmi:articl:jmi-v1i1a1 is not listed on IDEAS
    2. repec:jmi:articl:jmi-v2i1a1 is not listed on IDEAS
    3. Newton, Jonathan, 2017. "Shared intentions: The evolution of collaboration," Games and Economic Behavior, Elsevier, vol. 104(C), pages 517-534.

    More about this item

    Keywords

    Decentralized market; Job matching; Random path; Competitive salary; Stability;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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