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Premuneration Values and Investments in Matching Markets

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  • George J. Mailath
  • Andrew Postlewaite
  • Larry Samuelson

Abstract

We analyze a model in which agents make investments and then match into pairs to create a surplus. The agents can make transfers to reallocate their pretransfer ownership claims on the surplus. Mailath, Postlewaite and Samuelson (2013) showed that when investments are unobservable, equilibrium investments are generally inefficient. In this paper we work with a more structured model that is sufficiently tractable to analyze the nature of the investment inefficiencies. We provide conditions under which investment is inefficiently high or low and conditions under which changes in the pretransfer ownership claims on the surplus will be Pareto improving, as well as examine how the degree of heterogeneity on either side of the market affects investment efficiency.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2015. "Premuneration Values and Investments in Matching Markets," Levine's Bibliography 786969000000001202, UCLA Department of Economics.
    • Handle: RePEc:cla:levrem:786969000000001202
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    Cited by:

    1. Ahmadzadeh, Amirreza & Kamali-Shahdadi, Behrang, 2023. "Matching Unskilled/Skilled Workers to Firms Facing Budget Constraints," TSE Working Papers 23-1446, Toulouse School of Economics (TSE).
    2. Alston, Max, 2020. "On the non-existence of stable matches with incomplete information," Games and Economic Behavior, Elsevier, vol. 120(C), pages 336-344.
    3. Han, Seungjin & Sam, Alex & Shin, Youngki, 2024. "Monotone equilibrium in matching markets with signaling," Journal of Economic Theory, Elsevier, vol. 216(C).
    4. Dizdar, Deniz & Moldovanu, Benny, 2016. "On the importance of uniform sharing rules for efficient matching," Journal of Economic Theory, Elsevier, vol. 165(C), pages 106-123.
    5. Chen, Yi-Chun & Hu, Gaoji, 2020. "Learning by matching," Theoretical Economics, Econometric Society, vol. 15(1), January.

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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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