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Matching with Incomplete Information

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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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  • Quingmin Liu & George J. Mailath & Andrew Postlewaite & Larry Samuelson, 2012. "Matching with Incomplete Information," Cowles Foundation Discussion Papers 1870, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1870
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    1. 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.
    2. Lazarova, Emiliya A. & Dimitrov, Dinko, 2013. "Paths to Stability in Two-sided Matching with Uncertainty," Climate Change and Sustainable Development 146289, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    Matching; Stability; Stable outcome; Incomplete information; Core;
    All these keywords.

    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
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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