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Targeted Search in Matching Markets

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Abstract

We propose a parsimonious matching model where a person's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences?vertical versus horizontal?and that this interaction implies that preferences recovered using our model can look markedly different from those recovered using a model where the degree of randomness is not endogenous. We illustrate these results using data on the U.S. marriage market and show that the model can rationalize the finding of aspirational dating.

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  • Anton A. Cheremukhin & Paulina Restrepo-Echavarria & Antonella Tutino, 2013. "Targeted Search in Matching Markets," Working Papers 2014-35, Federal Reserve Bank of St. Louis.
  • Handle: RePEc:fip:fedlwp:2014-035
    DOI: 10.20955/wp.2014.035
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Les coulisses économiques des sites de rencontres
      by The Conversation in Contrepoints on 2020-08-02 03:35:44

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    2. Bartosz Maćkowiak & Filip Matějka & Mirko Wiederholt, 2023. "Rational Inattention: A Review," Journal of Economic Literature, American Economic Association, vol. 61(1), pages 226-273, March.
    3. Stanislav Rabinovich & Ronald Wolthoff, 2020. "Misallocation Effects of Labor Market Frictions," Working Papers tecipa-662, University of Toronto, Department of Economics.
    4. Xu, Yujing & Yang, Huanxing, 2019. "Targeted search with horizontal differentiation in the marriage market," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 31-62.
    5. Shi, Shouyong, 2023. "Sequentially mixed search and equilibrium price dispersion," Journal of Economic Theory, Elsevier, vol. 213(C).
    6. Rabinovich, Stanislav & Wolthoff, Ronald, 2022. "Misallocation inefficiency in partially directed search," Journal of Economic Theory, Elsevier, vol. 206(C).

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    More about this item

    Keywords

    Search; matching; endogenous randomness; preferences;
    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
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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