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Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

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  • M. Bumin Yenmez

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.

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  • M. Bumin Yenmez, 2013. "Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions," American Economic Journal: Microeconomics, American Economic Association, vol. 5(4), pages 120-141, November.
    • Handle: RePEc:aea:aejmic:v:5:y:2013:i:4:p:120-41
    Note: DOI: 10.1257/mic.5.4.120
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    References listed on IDEAS

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    Cited by:

    1. Chen, Yi-Chun & Hu, Gaoji, 2024. "Bayesian stable states," Games and Economic Behavior, Elsevier, vol. 145(C), pages 102-116.
    2. Benoit Decerf & Guillaume Haeringer & Martin Van der Linden, 2024. "Incontestable Assignments," Papers 2401.03598, arXiv.org, revised Feb 2024.
    3. M. Yenmez, 2015. "Incentive compatible market design with applications," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 543-569, August.
    4. Takashi Kunimoto & Cuiling Zhang, 2021. "On incentive compatible, individually rational public good provision mechanisms," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 431-468, August.
    5. Alston, Max, 2020. "On the non-existence of stable matches with incomplete information," Games and Economic Behavior, Elsevier, vol. 120(C), pages 336-344.
    6. Alva, Samson & Manjunath, Vikram, 2020. "The impossibility of strategy-proof, Pareto efficient, and individually rational rules for fractional matching," Games and Economic Behavior, Elsevier, vol. 119(C), pages 15-29.
    7. M. Bumin Yenmez, 2014. "College Admissions," GSIA Working Papers 2014-E24, Carnegie Mellon University, Tepper School of Business.
    8. Delacrétaz, David & Loertscher, Simon & Marx, Leslie M. & Wilkening, Tom, 2019. "Two-sided allocation problems, decomposability, and the impossibility of efficient trade," Journal of Economic Theory, Elsevier, vol. 179(C), pages 416-454.
    9. Dizdar, Deniz & Moldovanu, Benny, 2016. "On the importance of uniform sharing rules for efficient matching," Journal of Economic Theory, Elsevier, vol. 165(C), pages 106-123.
    10. Bikhchandani, Sushil, 2017. "Stability with one-sided incomplete information," Journal of Economic Theory, Elsevier, vol. 168(C), pages 372-399.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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