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Stable Matching with Peer-Dependent Preferences: Existence and Cutoff Characterization

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  • Jacob D. Leshno

Abstract

This paper presents a framework for stable matching markets that accommodates the peer-dependent preferences employed in empirical work. We show the existence of a stable matching in a continuum economy and of an approximately stable matching in a large finite sampled economy under assumptions satisfied by standard empirical specifications. The analysis builds on a tractable characterization of stable matchings with peer-dependent preferences in terms of supply and demand equations along with a rational-expectations condition.

Suggested Citation

  • Jacob D. Leshno, 2026. "Stable Matching with Peer-Dependent Preferences: Existence and Cutoff Characterization," Papers 2608.18381, arXiv.org.
    • Handle: RePEc:arx:papers:2608.18381
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    References listed on IDEAS

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    1. Jesse M. Rothstein, 2006. "Good Principals or Good Peers? Parental Valuation of School Characteristics, Tiebout Equilibrium, and the Incentive Effects of Competition among Jurisdictions," American Economic Review, American Economic Association, vol. 96(4), pages 1333-1350, September.
    2. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
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    4. Victor Lavy & M. Daniele Paserman & Analia Schlosser, 2012. "Inside the Black Box of Ability Peer Effects: Evidence from Variation in the Proportion of Low Achievers in the Classroom," Economic Journal, Royal Economic Society, vol. 122(559), pages 208-237, March.
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    6. Adam S. Booij & Edwin Leuven & Hessel Oosterbeek, 2017. "Ability Peer Effects in University: Evidence from a Randomized Experiment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(2), pages 547-578.
    7. Parag A. Pathak & Alvin E. Roth, 2013. "Matching with Couples: Stability and Incentives in Large Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(4), pages 1585-1632.
    8. Nicola Bianchi, 2020. "The Indirect Effects of Educational Expansions: Evidence from a Large Enrollment Increase in University Majors," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 767-804.
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