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Decentralized Matching Markets with Endogenous Salaries

Author

Listed:
  • Hideo Konishi

    () (Boston College)

  • Margarita Sapozhnikov

    (Boston College)

Abstract

In a Shapley-Shubik assignment problem with a supermodular output matrix, we consider games in which each firm makes a take-it-or-leave-it salary offer to one applicant, and a match is made only when the offer is accepted by her. We consider both one-shot and multistage games. In either game, we show that there can be many equilibrium salary vectors which are higher or lower than the minimal competitive salary vector. If we exclude artificial equilibria, applicants' equilibrium salary vectors are bounded above by the minimal competitive salary vector, while firms' equilibrium payoff vectors are bounded below by the payoff vector under the minimal competitive salary vector. This suggests that adopting the minimal competitive salary vector as the equilibrium outcome in decentralized markets does not have a strong justification.

Suggested Citation

  • Hideo Konishi & Margarita Sapozhnikov, 2006. "Decentralized Matching Markets with Endogenous Salaries," Boston College Working Papers in Economics 654, Boston College Department of Economics, revised 03 Jan 2008.
  • Handle: RePEc:boc:bocoec:654
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Fuhito Kojima, 2007. "Matching and Price Competition: Comment," American Economic Review, American Economic Association, vol. 97(3), pages 1027-1031, June.
    2. Jozsef Sakovics, 2011. "A labor market with targeted wage offers," ESE Discussion Papers 207, Edinburgh School of Economics, University of Edinburgh.
    3. Kohei Kawamura & József Sákovics, 2014. "Spillovers of Equal Treatment in Wage Offers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(5), pages 487-501, November.
    4. Diamantoudi, Effrosyni & Miyagawa, Eiichi & Xue, Licun, 2015. "Decentralized matching: The role of commitment," Games and Economic Behavior, Elsevier, vol. 92(C), pages 1-17.
    5. Kawamura, Kohei & Sákovics, József, 2013. "Partial Equal Treatment in Wage Offers," SIRE Discussion Papers 2013-06, Scottish Institute for Research in Economics (SIRE).
    6. Sákovics, József, 2014. "Price formation in a matching market with targeted offers," Games and Economic Behavior, Elsevier, vol. 87(C), pages 161-177.
    7. Muriel Niederle & Leeat Yariv, 2009. "Decentralized Matching with Aligned Preferences," NBER Working Papers 14840, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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