Identification and Estimation in Two-Sided Matching Markets
We study estimation and non-parametric identification of preferences in two-sided matching markets using data from a single market with many agents. We consider a model in which preferences of each side of the market are vertical, utility is non-transferable and the observed matches are pairwise stable. We show that preferences are not identified with data on one-to-one matches but are non-parametrically identified when data from many-to-one matches are observed. The additional empirical content in many-to-one matches is illustrated by comparing two simulated objective functions, one that does and the other that does not use information available in many-to-one matching. We also prove consistency of a method of moments estimator for a parametric model under a data generating process in which the size of the matching market increases, but data only on one market is observed. Since matches in a single market are interdependent, our proof of consistency cannot rely on observations of independent matches. Finally, we present Monte Carlo studies of a simulation based estimator.
|Date of creation:||Aug 2013|
|Date of revision:||Feb 2014|
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- Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
- Logan, John Allen & Hoff, Peter D. & Newton, Michael A., 2008. "Two-Sided Estimation of Mate Preferences for Similarities in Age, Education, and Religion," Journal of the American Statistical Association, American Statistical Association, vol. 103, pages 559-569, June.
- Gordon, Nora & Knight, Brian, 2009. "A spatial merger estimator with an application to school district consolidation," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 752-765, June.
- Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
- repec:cup:cbooks:9780521437882 is not listed on IDEAS
- Morten Sørensen, 2007. "How Smart Is Smart Money? A Two-Sided Matching Model of Venture Capital," Journal of Finance, American Finance Association, vol. 62(6), pages 2725-2762, December.
- Jeremy T. Fox, 2008. "Estimating Matching Games with Transfers," NBER Working Papers 14382, National Bureau of Economic Research, Inc.
- Fuhito Kojima & Parag A. Pathak, 2009. "Incentives and Stability in Large Two-Sided Matching Markets," American Economic Review, American Economic Association, vol. 99(3), pages 608-27, June.
- Clark Simon, 2006. "The Uniqueness of Stable Matchings," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-28, December.
- Muriel Niederle & Leeat Yariv, 2009. "Decentralized Matching with Aligned Preferences," NBER Working Papers 14840, National Bureau of Economic Research, Inc.
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