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Matching with Incomplete Information

Author

Listed:
  • Qingmin Liu
  • George J. Mailath
  • Andrew Postlewaite
  • Larry Samuelson

Abstract

A large literature uses matching models to analyze markets with two-sided heterogeneity, studying problems such as the matching of students to schools, residents to hospitals, husbands to wives, and workers to firms. The analysis typically assumes that the agents have complete information, and examines core outcomes. We formulate a notion of stable outcomes in matching problems with one-sided asymmetric information. The key conceptual problem is to formulate a notion of a blocking pair that takes account of the inferences that the uninformed agent might make from the hypothesis that the current allocation is stable. We show that the set of stable outcomes is nonempty in incomplete information environments, and is a superset of the set of complete-information stable outcomes. We provide sufficient conditions for incomplete-information stable matchings to be efficient.
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Suggested Citation

  • Qingmin Liu & George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2012. "Matching with Incomplete Information," Levine's Working Paper Archive 786969000000000551, David K. Levine.
  • Handle: RePEc:cla:levarc:786969000000000551
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    File URL: http://www.dklevine.com/archive/refs4786969000000000551.pdf
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    References listed on IDEAS

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    1. Forges Francoise, 1994. "Posterior Efficiency," Games and Economic Behavior, Elsevier, vol. 6(2), pages 238-261, March.
    2. Hector Chade & Gregory Lewis & Lones Smith, 2014. "Student Portfolios and the College Admissions Problem," Review of Economic Studies, Oxford University Press, vol. 81(3), pages 971-1002.
    3. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 253-281.
    4. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    5. Dutta, Bhaskar & Vohra, Rajiv, 2005. "Incomplete information, credibility and the core," Mathematical Social Sciences, Elsevier, vol. 50(2), pages 148-165, September.
    6. Chakraborty, Archishman & Citanna, Alessandro & Ostrovsky, Michael, 2010. "Two-sided matching with interdependent values," Journal of Economic Theory, Elsevier, vol. 145(1), pages 85-105, January.
    7. Chade, Hector, 2006. "Matching with noise and the acceptance curse," Journal of Economic Theory, Elsevier, vol. 129(1), pages 81-113, July.
    8. Lauermann, Stephan & Nöldeke, Georg, 2014. "Stable marriages and search frictions," Journal of Economic Theory, Elsevier, vol. 151(C), pages 163-195.
    9. Ehlers, Lars & Masso, Jordi, 2007. "Incomplete information and singleton cores in matching markets," Journal of Economic Theory, Elsevier, vol. 136(1), pages 587-600, September.
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    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D - Microeconomics

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