I study the consistency of incentive compatibility with several
stability notions for a one-to-one matching market with transfers.
Ex post stability, studied in the matching literature, is too strong to be
satisfied together with incentive compatibility. Therefore, I introduce
weaker stability notions: ex ante stability and interim stability.
Although ex ante stability is consistent with incentive compatibility
when agents are ex ante identical or when the market is balanced,
interim stability can only be satisfied when there is one agent on the
short side of the market, as in auctions. Which stability is appropriate
depends on when agents can block.
"Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions."
American Economic Journal: Microeconomics,
Bargaining Theory; Matching Theory
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