A Theory of Stability in Matching with Incomplete Information
AbstractWe provide a framework for studying two-sided matching markets with incomplete information. The framework accommodates two-sided incomplete information as well as heterogeneous information among the agents. We propose a notion called stability for a market state, which, based upon agents' information structure, requires (i) individual rationality, (ii) no blocking, and (iii) information stability. The novelty of our stability notion lies in how the agents evaluate a blocking prospect in the presence of general two-sided incomplete information. We show that a stable state exists; moreover, if a state is stable, then coarsening agents' information leads to another stable state.
CitationChen, Yi-Chun, and Gaoji Hu. 2023. "A Theory of Stability in Matching with Incomplete Information." American Economic Journal: Microeconomics, 15 (1): 288-322. DOI: 10.1257/mic.20200411
- C78 Bargaining Theory; Matching Theory
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness