Matching with Contracts: An Efficient Marriage Market?
This paper studies a marriage market with two-sided information asymmetry in whichthe gains from marriage are stochastic. Contracts specify divisions of ex-post realizedmarital surplus. I first study a game in which one side of the matching market offerscontracts. I show that when expected marital surplus is strictly monotonic in agentsâ€™types, no separating equilibrium that achieves matching efficiency exists. I then studya social plannerâ€™s problem, finding necessary and sufficient conditions for a truthful directrevelation mechanism to achieve matching efficiency. These conditions become morestringent as the number of agents in the matching market increases.
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- 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.
- Ettore Damiano & Hao Li, 2007. "Price discrimination and efficient matching," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(2), pages 243-263, February.
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