IDEAS home Printed from https://ideas.repec.org/a/wly/econjl/v128y2018i613p2003-2031.html
   My bibliography  Save this article

Matching to Share Risk without Commitment

Author

Listed:
  • Johannes Gierlinger
  • Sarolta Laczó

Abstract

This article studies the effect of limited commitment on sorting when two sides of a frictionless market form pairs to share risk. On each side, agents are identical except for their risk preferences. First, we provide analytical results when transfers do not condition on the history of shocks. More risk‐averse agents can commit to larger transfers, as long as their consumption is less risky than their endowment. With sufficiently large idiosyncratic risk and sufficient discounting of the future, matching is positive assortative, unlike under full commitment. Second, we find positive‐assortative stable matchings when transfers are history dependent, using a numerical algorithm.

Suggested Citation

  • Johannes Gierlinger & Sarolta Laczó, 2018. "Matching to Share Risk without Commitment," Economic Journal, Royal Economic Society, vol. 128(613), pages 2003-2031, August.
  • Handle: RePEc:wly:econjl:v:128:y:2018:i:613:p:2003-2031
    DOI: 10.1111/ecoj.12490
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ecoj.12490
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Inés Macho-Stadler & David Pérez-Castrillo, 2020. "Agency Theory Meets Matching Theory," Working Papers 1140, Barcelona Graduate School of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:econjl:v:128:y:2018:i:613:p:2003-2031. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://edirc.repec.org/data/resssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.