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Matching rules

Author

Listed:
  • Vincy Fon

    (Department of Economics, George Washington University, USA)

  • Francesco Parisi

    (School of Law, University of Minnesota, MN, USA; Department of Economics, University of Bologna, Italy)

Abstract

Institutions often utilize matching rules to achieve cooperative outcomes. However, the equilibrium induced by a matching rule may not be socially optimal. After presenting the case in which matching rules yield privately and socially optimal levels of cooperation, this article identifies the conditions which generate inefficient cooperation. Matching rules undershoot (i.e. parties cooperate less than is socially optimal) in one group of cases. In a second, more puzzling case, matching rules overshoot (i.e. parties that interact under a matching constraint are induced to cooperate more than is socially optimal). This paper identifies the conditions for such occurrences. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Vincy Fon & Francesco Parisi, 2008. "Matching rules," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 57-70.
    • Handle: RePEc:wly:mgtdec:v:29:y:2008:i:1:p:57-70
    DOI: 10.1002/mde.1400
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    References listed on IDEAS

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    7. G. Daniel & M. Arce & Todd Sandler, 2005. "The Dilemma of the Prisoners’ Dilemmas," Kyklos, Wiley Blackwell, vol. 58(1), pages 3-24, February.
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    Cited by:

    1. Schaefer Hans-Bernd, 2020. "Laudatio: Francesco Parisi," Review of Law & Economics, De Gruyter, vol. 16(1), pages 1-9, March.
    2. Parisi Francesco, 2020. "Law and Economics as We Grow Younger," Review of Law & Economics, De Gruyter, vol. 16(1), pages 1-20, March.

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