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  4. November 2013
  5. Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

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Abstract

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.

Citation

Yenmez, M Bumin. 2013. "Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions." American Economic Journal: Microeconomics, 5 (4): 120-41. DOI: 10.1257/mic.5.4.120

Additional Materials

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • D44 Auctions
  • D83 Search; Learning; Information and Knowledge; Communication; Belief
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