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Individual Rationality Conditions of Identifying Matching Costs in Transferable Utility Matching Games

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  • Suguru Otani

Abstract

As the widely applied method for measuring matching assortativeness in a transferable utility matching game, a matching maximum score estimation is proposed by \cite{fox2010qe}. This article reveals that combining unmatched agents, transfers, and individual rationality conditions with sufficiently large penalty terms makes it possible to identify the coefficient parameter of a single common constant, i.e., matching costs in the market.

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  • Suguru Otani, 2022. "Individual Rationality Conditions of Identifying Matching Costs in Transferable Utility Matching Games," Papers 2204.00713, arXiv.org, revised Apr 2022.
    • Handle: RePEc:arx:papers:2204.00713
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    References listed on IDEAS

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    1. 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.
    2. Jeremy T. Fox, 2010. "Identification in matching games," Quantitative Economics, Econometric Society, vol. 1(2), pages 203-254, November.
    3. Yihui Pan, 2017. "The Determinants and Impact of Executive-Firm Matches," Management Science, INFORMS, vol. 63(1), pages 185-200, January.
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