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Contract terms monotonicity in matching markets

Author

Listed:
  • Rouault, Cyril

    (CEPS, ENS Paris-Saclay, University of Paris-Saclay)

Abstract

We study doctor–hospital matching markets with contracts, in which hospitals can offer a range of contract terms to doctors. We show that introducing new terms can reduce doctors’ welfare, whereas withdrawing terms may generate a Pareto improvement. We establish the preference domains under which welfare is preserved and show that only \textit{agent-lexicographic preferences} for all agents ensure that no doctor is worse off when additional terms are introduced. Since this condition is rarely satisfied in practice, our results imply that most real-world markets are vulnerable to welfare losses when the set of contract terms expands.

Suggested Citation

  • Rouault, Cyril, 0. "Contract terms monotonicity in matching markets," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6473
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    Keywords

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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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