Decentralized Market Processes to Stable Job Matchings with Competitive Salaries
We analyze a decentralized trading process in a basic labor market where heterogeneous firms and workers meet directly and randomly, and negotiate salaries with each other over time. Firms and workers may not have a complete picture of the entire market and can thus behave myopically in the process. Our main result establishes that, starting from an arbitrary initial market state, there exists a finite sequence of successive myopic (firm-worker) pair improvements, or bilateral trades, leading to a stable matching between firms and workers with a scheme of competitive salary offers. An important implication of this result is that a general random process where every possible bilateral trade is chosen with a positive probability converges with probability one to a competitive equilibrium of the market.
|Date of creation:||Jan 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0)1904 323776
Fax: (0)1904 323759
Web page: http://www.york.ac.uk/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pathak, Parag A. & Abdulkadiroglu, Atila & Roth, Alvin, 2005.
"The New York City High School Match,"
2562765, Harvard University Department of Economics.
- Atila Abdulkadiroglu & Tayfun Smez, 2003.
"School Choice: A Mechanism Design Approach,"
0203-18, Columbia University, Department of Economics.
- M.Utku Unver & Fuhito Kojima, 2006.
"Random Paths to Pairwise Stability in Many-to-Many Matching Problems: A Study on Market Equilibration,"
256, University of Pittsburgh, Department of Economics, revised Jan 2006.
- Fuhito Kojima & M. Ünver, 2008. "Random paths to pairwise stability in many-to-many matching problems: a study on market equilibration," International Journal of Game Theory, Springer, vol. 36(3), pages 473-488, March.
- Klaus, Bettina & Klijn, Flip, 2007.
"Paths to stability for matching markets with couples,"
Games and Economic Behavior,
Elsevier, vol. 58(1), pages 154-171, January.
- Bettina Klaus & Flip Klijn, 2004. "Paths to Stability for Matching Markets with Couples," Working Papers 156, Barcelona Graduate School of Economics.
- Bettina Klaus & Flip Klijn, 2004. "Paths to Stability for Matching Markets with Couples," UFAE and IAE Working Papers 604.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC), revised 01 Dec 2005.
- Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
- Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
- Ning Sun & Zaifu Yang, 2009. "A Double-Track Adjustment Process for Discrete Markets With Substitutes and Complements," Econometrica, Econometric Society, vol. 77(3), pages 933-952, 05.
- Diamantoudi, Effrosyni & Miyagawa, Eiichi & Xue, Licun, 2004.
"Random paths to stability in the roommate problem,"
Games and Economic Behavior,
Elsevier, vol. 48(1), pages 18-28, July.
When requesting a correction, please mention this item's handle: RePEc:yor:yorken:11/03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paul Hodgson)
If references are entirely missing, you can add them using this form.