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Stable Marriages and Search Frictions

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  • Lauermann, Stephan
  • Nöldeke, George

Abstract

We embed a two-sided matching market with non-transferable utility, a marriage market, into a random search model. We study steadystate equilibria and characterize the limit of the corresponding equilibrium matchings as exogenous search frictions become small. The central question is whether the set of such limit matchings coincides with the set of stable matchings for the underlying marriage market. We show that this is the case if and only if there is a unique stable matching. Otherwise, the set of limit matchings contains the set of all stable deterministic matchings, but also contains unstable random matchings. These unstable random matchings are Pareto dominated. Thus, vanishing frictions do not guarantee the eciency of decentralized marriage markets.

Suggested Citation

  • Lauermann, Stephan & Nöldeke, George, 2012. "Stable Marriages and Search Frictions," Working papers 2012/10, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2012/10
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    Cited by:

    1. Lauermann, Stephan & Nöldeke, Georg, 2015. "Existence of steady-state equilibria in matching models with search frictions," Economics Letters, Elsevier, vol. 131(C), pages 1-4.
    2. Yann Bramoullé & Brian W. Rogers & Erdem Yenerdag, 2022. "Matching with Recall," AMSE Working Papers 2203, Aix-Marseille School of Economics, France.
    3. Jean Guillaume Forand & Vikram Maheshri, 2012. "(De)Regulation and Market Thickness," Working Papers 1202, University of Waterloo, Department of Economics, revised Oct 2012.
    4. Stephan Lauermann & Georg Nöldeke & Thomas Tröger, 2020. "The Balance Condition in Search‐and‐Matching Models," Econometrica, Econometric Society, vol. 88(2), pages 595-618, March.
    5. Wu, Qinggong, 2015. "A finite decentralized marriage market with bilateral search," Journal of Economic Theory, Elsevier, vol. 160(C), pages 216-242.
    6. Qingmin Liu & George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2012. "Matching with Incomplete Information," PIER Working Paper Archive 12-032, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. Qingmin Liu & George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2010. "Stable Matching with Incomplete Information, Second Version," PIER Working Paper Archive 12-042, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 28 Oct 2012.
    8. Daniel Huttenlocher & Hannah Li & Liang Lyu & Asuman Ozdaglar & James Siderius, 2023. "Matching of Users and Creators in Two-Sided Markets with Departures," Papers 2401.00313, arXiv.org, revised Jan 2024.
    9. Roberto Bonilla & Alberto Trejos, 2021. "Marriage and employment participation with wage bargaining in search equilibrium," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 517-533, September.
    10. Chen, Yi-Chun & Hu, Gaoji, 2020. "Learning by matching," Theoretical Economics, Econometric Society, vol. 15(1), January.
    11. Yenmez, M. Bumin, 2018. "A college admissions clearinghouse," Journal of Economic Theory, Elsevier, vol. 176(C), pages 859-885.
    12. Vinay Ramani & K. S. Mallikarjuna Rao, 2018. "Paths to stability and uniqueness in two-sided matching markets," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(4), pages 1137-1150, November.
    13. Itai Ashlagi & Mark Braverman & Yash Kanoria & Peng Shi, 2020. "Clearing Matching Markets Efficiently: Informative Signals and Match Recommendations," Management Science, INFORMS, vol. 66(5), pages 2163-2193, May.
    14. John K. Dagsvik & Zhiyang Jia, 2018. "Aggregate behavior in matching markets with flexible contracts and non-transferable representations of preferences," Discussion Papers 875, Statistics Norway, Research Department.

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    More about this item

    Keywords

    Marriage Market; Stable Matchings; Random Matchings; Search Frictions;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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