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American Economic Review: Vol. 95 No. 4 (September 2005)
AER Volume. 95, Issue 4 | Next Article
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Matching with Contracts
Article Citation
Hatfield, John William, and
Paul R. Milgrom. 2005. "Matching with Contracts."
The American Economic Review,
95(4): 913-935.
DOI: 10.1257/0002828054825466
DOI: 10.1257/0002828054825466
Abstract
We develop a model of matching with contracts which incorporates, as special cases, the college admissions problem, the Kelso-Crawford labor market matching model, and ascending package auctions. We introduce a new "law of aggregate demand" for the case of discrete heterogeneous workers and show that, when workers are substitutes, this law is satisfied by profit-maximizing firms. When workers are substitutes and the law is satisfied, truthful reporting is a dominant strategy for workers in a worker-offering auction/matching algorithm. We also parameterize a large class of preferences satisfying the two conditions.
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Authors
Hatfield, John William
Milgrom, Paul R.
Milgrom, Paul R.
