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Targeted Search in Matching Markets

Author

Listed:
  • Anton Cheremukhin

    (Federal Reserve Bank of Dallas)

  • Antonella Tutino

    (Federal Reserve Bank of Dallas)

  • Paulina Restrepo-Echavarria

    (Federal Reserve Bank of St Louis and Was)

Abstract

We propose a parsimonious matching model where people'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 estimated using our model can look markedly different from those estimated using a model where the degree of randomness is not endogenous. We illustrate these results using data on the U.S. marriage market and finish by showing that the model can rationalize the finding of aspirational dating.

Suggested Citation

  • Anton Cheremukhin & Antonella Tutino & Paulina Restrepo-Echavarria, 2019. "Targeted Search in Matching Markets," 2019 Meeting Papers 1114, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1114
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    File URL: https://economicdynamics.org/meetpapers/2019/paper_1114.pdf
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    References listed on IDEAS

    as
    1. Adachi, Hiroyuki, 2003. "A search model of two-sided matching under nontransferable utility," Journal of Economic Theory, Elsevier, vol. 113(2), pages 182-198, December.
    2. Filip Matêjka & Alisdair McKay, 2015. "Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model," American Economic Review, American Economic Association, vol. 105(1), pages 272-298, January.
    3. George‐Levi Gayle & Andrew Shephard, 2019. "Optimal Taxation, Marriage, Home Production, and Family Labor Supply," Econometrica, Econometric Society, vol. 87(1), pages 291-326, January.
    4. Guido Menzio, 2007. "A Theory of Partially Directed Search," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 748-769, October.
    5. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
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