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Envious Preferences in Two-sided Matching

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  • Ahamad, Mazbahul

Abstract

We develop a model of two-sided matching problem with individual-sided envious preferences that originate from an emulative envy effect in which a more desirable state that is preferred is owned by the other individual. We assume envious preferences influence an individual’s decision to enter into a two-sided network instead of being unassigned. In this paper, we show that an individual-sided envious preference leads to a stable matching under a two-sided market framework. Applying the mechanism of the model to behavioral contract theory, we show that individual-proposing envious acceptance leads to stable farmer-buyer contract matching considering buyer’s time invariant preference. We further argue that individual’s envious preference also contributes to herd-type acceptance that dominates individual’s logical preferences in participation decision under a less risky environment.

Suggested Citation

  • Ahamad, Mazbahul, 2016. "Envious Preferences in Two-sided Matching," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235482, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:235482
    DOI: 10.22004/ag.econ.235482
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    File URL: http://ageconsearch.umn.edu/record/235482/files/2016%20AAEA_ID_%20P8943_Envious%20Preferences%20in%20Two-sided%20Matching.pdf
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    References listed on IDEAS

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    4. Boris Gershman, 2014. "The two sides of envy," Journal of Economic Growth, Springer, vol. 19(4), pages 407-438, December.
    5. Alcalde-Unzu, Jorge & Molis, Elena, 2011. "Exchange of indivisible goods and indifferences: The Top Trading Absorbing Sets mechanisms," Games and Economic Behavior, Elsevier, vol. 73(1), pages 1-16, September.
    6. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September.
    7. Anna Bogomolnaia & Herve Moulin, 2004. "Random Matching Under Dichotomous Preferences," Econometrica, Econometric Society, vol. 72(1), pages 257-279, January.
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    9. Yair Antler, 2015. "Two-Sided Matching with Endogenous Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 241-258, August.
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    12. Roth, Alvin E & Sotomayor, Marilda, 1989. "The College Admissions Problem Revisited," Econometrica, Econometric Society, vol. 57(3), pages 559-570, May.
    13. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
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    Keywords

    Agribusiness; Agricultural and Food Policy; Industrial Organization; Institutional and Behavioral Economics;

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