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Unobserved Heterogeneity in Matching Games

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  • Jeremy T. Fox
  • Chenyu Yang
  • David H. Hsu

Abstract

Agents in two-sided matching games vary in characteristics that are unobservable in typical data on matching markets. We investigate the identification of the distribution of unobserved characteristics using data on who matches with whom. In full generality, we consider many-to-many matching and matching with trades. The distribution of match-specific unobservables cannot be fully recovered without information on unmatched agents, but the distribution of a combination of unobservables, which we call unobserved complementarities, can be identified. Using data on unmatched agents restores identification.

Suggested Citation

  • Jeremy T. Fox & Chenyu Yang & David H. Hsu, 2018. "Unobserved Heterogeneity in Matching Games," Journal of Political Economy, University of Chicago Press, vol. 126(4), pages 1339-1373.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/697740
    DOI: 10.1086/697740
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