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A Model of Partnership Formation with Friction and Multiple Criteria

  • Stephen Kinsella

    (Department of Economics, Kemmy School of Business, University of Limerick)

  • David M. Ramsey

    (Department of Mathematics and Statistics, University of Limerick)

We present a model of partnership formation based on two discrete character traits. There are two classes of individual. Each individual observes a sequence of potential partners from the other class. The traits are referred to as attractiveness and character, respectively. All individuals prefer partners of high attractiveness and similar character. Attractiveness can be measured instantly. However, in order to observe the character of an individual, a costly interview (or date) is required. On observing the attractiveness of a prospective partner, an individual must decide whether he/she wishes to proceed to the interview stage. During the interview phase, the prospective pair observe each other's character and then decide whether they wish to form a pair. Mutual acceptance is required for both an interview to occur and a pair to form. An individual stops searching on nding a partner. A set of criteria based on the concept of a subgame perfect Nash equilibrium is used to define an equilibrium of this game. It is argued that under such a general formulation there may be multiple equilibria. For this reason, we define a specific formulation of the game, the so called symmetric version, which has a unique symmetric equilibrium. The form of this equilibrium has some similarities to the block separating equilibrium derived for classical models of two-sided mate choice and job search problems, but is essentially different.

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Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201119.

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Length: 26 pages
Date of creation: 13 Sep 2011
Date of revision:
Handle: RePEc:ucd:wpaper:201119
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  1. Manolis Galenianos & Philipp Kircher, 2009. "Directed search with multiple job applications," LSE Research Online Documents on Economics 29702, London School of Economics and Political Science, LSE Library.
  2. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 869-891.
  3. Lones Smith & Hector Chade, 2004. "Simultaneous Search," 2004 Meeting Papers 25, Society for Economic Dynamics.
  4. Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2b, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Spear, Stephen E., 1991. "Growth, externalities, and sunspots," Journal of Economic Theory, Elsevier, vol. 54(1), pages 215-223, June.
  6. MacMinn, Richard D, 1980. "Search and Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 308-27, April.
  7. Burdett, Kenneth & Coles, Melvyn G, 1999. "Long-Term Partnership Formation: Marriage and Employment," Economic Journal, Royal Economic Society, vol. 109(456), pages F307-34, June.
  8. Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December.
  9. (Vela) Velupillai, K., 1997. "Expository notes on computability and complexity in (arithmetical) games," Journal of Economic Dynamics and Control, Elsevier, vol. 21(6), pages 955-979, June.
  10. Coles, Melvyn & Francesconi, Marco, 2007. "On the Emergence of Toyboys: Equilibrium Matching with Ageing and Uncertain Careers," IZA Discussion Papers 2612, Institute for the Study of Labor (IZA).
  11. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
  12. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February.
  13. Ramsey, David M., 2008. "A large population job search game with discrete time," European Journal of Operational Research, Elsevier, vol. 188(2), pages 586-602, July.
  14. Spear, Stephen E, 1989. "Learning Rational Expectations under Computability Constraints," Econometrica, Econometric Society, vol. 57(4), pages 889-910, July.
  15. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
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