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Two-sided search and perfect segregation with fixed search costs

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  • Chade, Hector

Abstract

This paper studies a two-sided search model with the following characteristics: there is a continuum of agents with different types in each population, match utility is nontransferable, and there is a fixed search cost that agents incur in each period. When utility functions are additively separable in types and strictly increasing in the partner's type, there exists a unique matching equilibrium that exhibits perfect segregation as in Smith (1997) and Burdett and Coles (1997); i.e., agents form clusters and mate only within them. The role of additive separability and xed search costs is discussed and contrasted with the discounted case, and an intuitive explanation for the different results obtained in the literature is provided. Also, a simple sufficient condition on the match utility function and the density of types allow us to characterize the duration of the search for each type of agent.
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Suggested Citation

  • Chade, Hector, 2001. "Two-sided search and perfect segregation with fixed search costs," Mathematical Social Sciences, Elsevier, vol. 42(1), pages 31-51, July.
  • Handle: RePEc:eee:matsoc:v:42:y:2001:i:1:p:31-51
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    References listed on IDEAS

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    1. 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, .
    2. Ken Burdett & Randall Wright, 1998. "Two-Sided Search with Nontransferable Utility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 220-245, January.
    3. Ken Burdett & Melvyn G. Coles, 1997. "Marriage and Class," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 141-168.
    4. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-1150, September.
    5. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    6. Laitner, John, 1991. "Modeling Marital Connections among Family Lines," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1123-1141, December.
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    Citations

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    Cited by:

    1. Hector Chade & Gustavo Ventura, 2005. "Income Taxation and Marital Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 565-599, Juky.
    2. E. M. Parilina & A. Tampieri, 2013. "Marriage Formation with Assortative Meeting as a Two-Sided Optimal Stopping Problem," Working Papers wp886, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. repec:eee:eecrev:v:106:y:2018:i:c:p:54-76 is not listed on IDEAS
    4. Hector Chade & Gustavo Ventura, 2002. "Taxes and Marriage: A Two-Sided Search Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 955-986, August.
    5. Herrenbrueck, Lucas & Xia, Xiaoyu & Eastwick, Paul & Hui, Chin Ming, 2018. "Smart-dating in speed-dating: How a simple Search model can explain matching decisions," European Economic Review, Elsevier, vol. 106(C), pages 54-76.
    6. Chen, Frederick H., 2005. "Monotonic matching in search equilibrium," Journal of Mathematical Economics, Elsevier, vol. 41(6), pages 705-721, September.
    7. repec:spr:eurase:v:8:y:2018:i:1:d:10.1007_s40822-017-0084-y is not listed on IDEAS
    8. repec:aea:jeclit:v:55:y:2017:i:2:p:493-544 is not listed on IDEAS
    9. Chen, Yan & Fehr, Ernst & Fischbacher, Urs & Morgan, Peter, 2015. "Decentralized matching and social segregation," Games and Economic Behavior, Elsevier, vol. 90(C), pages 17-43.
    10. Chade, Hector, 2006. "Matching with noise and the acceptance curse," Journal of Economic Theory, Elsevier, vol. 129(1), pages 81-113, July.
    11. Coles, Melvyn & Francesconi, Marco, 2007. "On the Emergence of Toyboys: Equilibrium Matching with Ageing and Uncertain Careers," IZA Discussion Papers 2612, Institute for the Study of Labor (IZA).
    12. Thomas Tröger & Georg Nöldeke, 2009. "Matching Heterogeneous Agents with a Linear Search Technology," Bonn Econ Discussion Papers bgse1_2009, University of Bonn, Germany.
    13. Akın, Ş. Nuray & Platt, Brennan C., 2016. "Accounting for age in marital search decisions," European Economic Review, Elsevier, vol. 85(C), pages 245-271.

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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