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Strategic complementarities and unraveling in matching markets

Author

Listed:
  • Echenique, Federico

    (Division of the Humanities and Social Sciences, California Institute of Technology)

  • Pereyra, Juan Sebastián

    (Department of Economics, ECARES - Université Libre de Bruxelles)

Abstract

We present a theoretical explanation of inefficient early matching in matching markets. Our explanation is based on strategic complementarities and strategic unraveling. We identify a negative externality imposed on the rest of the market by agents who make early offers. As a consequence, an agent may make an early offer because she is concerned that others are making early offers. Yet other agents make early offers because they are concerned that others worry about early offers; and so on and so forth. The end result is that any given agent is more likely to make an early offer than a late offer.

Suggested Citation

  • Echenique, Federico & Pereyra, Juan Sebastián, 2016. "Strategic complementarities and unraveling in matching markets," Theoretical Economics, Econometric Society, vol. 11(1), January.
    • Handle: RePEc:the:publsh:1831
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    11. Guillaume R. Fréchette & Alvin E. Roth & M. Utku Ünver, 2007. "Unraveling yields inefficient matchings: evidence from post-season college football bowls," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 967-982, December.
    12. Muriel Niederle & Alvin E. Roth & M. Utku Ünver, 2013. "Unraveling Results from Comparable Demand and Supply: An Experimental Investigation," Games, MDPI, vol. 4(2), pages 1-40, June.
    13. Alvin E Roth & Richard A Posner & Christine Jolls & Christopher Avery, 2007. "The New Market for Federal Judicial Law Clerks," Levine's Bibliography 843644000000000288, UCLA Department of Economics.
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    Cited by:

    1. Anne-Christine Barthel & Tarun Sabarwal, 2018. "Directional monotone comparative statics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(3), pages 557-591, October.
    2. Guillaume Haeringer & Vincent Iehlé, 2019. "Two-Sided Matching with (Almost) One-Sided Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 11(3), pages 155-190, August.
    3. Ambuehl, Sandro & Groves, Vivienne, 2020. "Unraveling over time," Games and Economic Behavior, Elsevier, vol. 121(C), pages 252-264.
    4. Haeringer, Guillaume & Iehlé, Vincent, 2021. "Gradual college admission," Journal of Economic Theory, Elsevier, vol. 198(C).
    5. Yuhta Ishii & Aniko Ory & Adrien Vigier, 2018. "Competing for Talent," Cowles Foundation Discussion Papers 3019, Cowles Foundation for Research in Economics, Yale University.
    6. Fuentes Matías & Tohmé Fernando, 2019. "Stable Matching with Double Infinity of Workers and Firms," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(2), pages 1-8, June.
    7. Sandro Ambuehl & Vivienne Groves, 2017. "Unraveling Over Time," CESifo Working Paper Series 6739, CESifo.
    8. Siqi Pan, 2018. "Exploding offers and unraveling in two-sided matching markets," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 351-373, March.
    9. Peter Biro & Elena Iñarra & Elena Molis, 2014. "A new solution for the roommate problem. The Q-stable matchings," ThE Papers 14/04, Department of Economic Theory and Economic History of the University of Granada..
    10. Yuhta Ishii & Aniko Ory & Adrien Vigier, 2018. "Competing for Talent," Cowles Foundation Discussion Papers 2119, Cowles Foundation for Research in Economics, Yale University.
    11. Bramoullé, Yann & Rogers, Brian & Yenerdag, Erdem, 2022. "Matching with Recall," CEPR Discussion Papers 17048, C.E.P.R. Discussion Papers.
    12. Benjamin N. Roth & Ran I. Shorrer, 2021. "Making Marketplaces Safe: Dominant Individual Rationality and Applications to Market Design," Management Science, INFORMS, vol. 67(6), pages 3694-3713, June.
    13. Vincent Iehlé, 2016. "Gradual College Admisssion," Post-Print halshs-02367006, HAL.
    14. Barua, Limon & Zou, Bo & Choobchian, Pooria, 2023. "Maximizing truck platooning participation with preferences," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 179(C).

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    More about this item

    Keywords

    Stable matching; Gale-Shapley; unraveling;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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