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Matching with Trade-offs: Revealed Preferences over Competiting Characteristics

Author

Listed:
  • Alfred Galichon

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

  • Bernard Salanié

    (Columbia University [New York])

Abstract

We investigate in this paper the theory and econometrics of optimal matchings with competing criteria. The surplus from a marriage match, for instance, may depend both on the incomes and on the educations of the partners, as well as on characteristics that the analyst does not observe. The social optimum must therefore trade off matching on incomes and matching on educations. Given a exible specification of the surplus function, we characterize under mild assumptions the properties of the set of feasible matchings and of the socially optimal matching. Then we show how data on the covariation of the types of the partners in observed matches can be used to estimate the parameters that define social preferences over matches. We provide both nonparametric and parametric procedures that are very easy to use in applications.

Suggested Citation

  • Alfred Galichon & Bernard Salanié, 2010. "Matching with Trade-offs: Revealed Preferences over Competiting Characteristics," Working Papers hal-00473173, HAL.
    • Handle: RePEc:hal:wpaper:hal-00473173
    Note: View the original document on HAL open archive server: https://hal.science/hal-00473173v1
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    Keywords

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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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