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Endogenous matching predictions in a repeated partnership model with imperfect monitoring

Author

Listed:
  • Galina Vereshchagina

    (Arizona State University)

  • Ayca Kaya

    (University of Iowa)

Abstract

This paper embeds a repeated partnership game with imperfect monitoring into a matching environment. We show that even though the underlying technology of production exhibits no complementarities with respect to types of the partners, the presence of imperfect monitoring leads to non-trivial matching predictions. In particular, if the agents' effort is complementary to their own and their partners' types (marginal products of effort are increasing in types), equilibrium matching structure is negative (i.e., the high-type agents are matched with the low-type partners). If, on the other hand, effort and type are (sufficiently) substitutable, the types are matched positively in the equilibrium.

Suggested Citation

  • Galina Vereshchagina & Ayca Kaya, 2009. "Endogenous matching predictions in a repeated partnership model with imperfect monitoring," 2009 Meeting Papers 829, Society for Economic Dynamics.
    • Handle: RePEc:red:sed009:829
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    References listed on IDEAS

    as
    1. Patrick Legros & Andrew F. Newman, 2007. "Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities," Econometrica, Econometric Society, vol. 75(4), pages 1073-1102, July.
    2. Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
    3. Patrick Legros & Andrew Newman, 2007. "Beauty is a beast, frog is a prince :assortative matching in a nontransferable world," ULB Institutional Repository 2013/7022, ULB -- Universite Libre de Bruxelles.
    4. Abreu, Dilip & Milgrom, Paul & Pearce, David, 1991. "Information and Timing in Repeated Partnerships," Econometrica, Econometric Society, vol. 59(6), pages 1713-1733, November.
    Full references (including those not matched with items on IDEAS)

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