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What price stability? Social welfare in matching markets

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  • Boudreau, James W.
  • Knoblauch, Vicki

Abstract

In two-sided matching markets, stability can be costly. We define social welfare functions for matching markets and use them to formulate a definition of the price of stability. We then show that it is common to find a price tag attached to stability, and that the price of stability can be substantial. Therefore, when choosing a matching mechanism, a social planner would be well advised to weigh the price of stability against the value of stability, which varies from market to market.

Suggested Citation

  • Boudreau, James W. & Knoblauch, Vicki, 2014. "What price stability? Social welfare in matching markets," Mathematical Social Sciences, Elsevier, vol. 67(C), pages 27-33.
  • Handle: RePEc:eee:matsoc:v:67:y:2014:i:c:p:27-33
    DOI: 10.1016/j.mathsocsci.2013.09.004
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    References listed on IDEAS

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    1. James Boudreau & Vicki Knoblauch, 2013. "Preferences and the price of stability in matching markets," Theory and Decision, Springer, vol. 74(4), pages 565-589, April.

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