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Two-Sided Matching with Endogenous Preferences

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  • Yair Antler

Abstract

We modify the stable matching problem by allowing agents' preferences to depend on the endogenous actions of agents on the other side of the market. Conventional matching theory results break down in the modified setup. In particular, every game that is induced by a stable matching mechanism (e.g., the Gale-Shapley mechanism) may have equilibria that result in matchings that are not stable with respect to the agents' endogenous preferences. However, when the Gale-Shapley mechanism is slightly modified, every equilibrium of its induced game results in a pairwise stable matching with respect to the endogenous preferences as long as they satisfy a natural reciprocity property. (JEL C78, D82)

Suggested Citation

  • Yair Antler, 2015. "Two-Sided Matching with Endogenous Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 241-258, August.
    • Handle: RePEc:aea:aejmic:v:7:y:2015:i:3:p:241-58
    Note: DOI: 10.1257/mic.20130272
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    References listed on IDEAS

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    1. Ran Spiegler, 2002. "Equilibrium in Justifiable Strategies: A Model of Reason-based Choice in Extensive-form Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(3), pages 691-706.
    2. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
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    Citations

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    Cited by:

    1. Sohn, Jin-yeong & Wu, Wenhao, 2022. "Reciprocity with uncertainty about others," Games and Economic Behavior, Elsevier, vol. 136(C), pages 299-324.
    2. Meisner, Vincent & von Wangenheim, Jonas, 2019. "School Choice and Loss Aversion," Rationality and Competition Discussion Paper Series 208, CRC TRR 190 Rationality and Competition.
    3. Timm Opitz & Christoph Schwaiger, 2023. "Reciprocal Preferences in Matching Markets," Rationality and Competition Discussion Paper Series 388, CRC TRR 190 Rationality and Competition.
    4. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    5. Antler, Y, 2016. "No One Likes to Be Second Choice," Economics Discussion Papers 17510, University of Essex, Department of Economics.
    6. Meisner, Vincent & von Wangenheim, Jonas, 2023. "Loss aversion in strategy-proof school-choice mechanisms," Journal of Economic Theory, Elsevier, vol. 207(C).
    7. Haeringer, Guillaume & Iehlé, Vincent, 2021. "Gradual college admission," Journal of Economic Theory, Elsevier, vol. 198(C).
    8. Kloosterman, Andrew & Troyan, Peter, 2020. "School choice with asymmetric information: priority design and the curse of acceptance," Theoretical Economics, Econometric Society, vol. 15(3), July.
    9. Avinatan Hassidim & Assaf Romm & Ran I. Shorrer, 2021. "The Limits of Incentives in Economic Matching Procedures," Management Science, INFORMS, vol. 67(2), pages 951-963, February.
    10. Moscariello, Paola, 2024. "Information avoidance in school choice," Games and Economic Behavior, Elsevier, vol. 145(C), pages 339-355.
    11. Vincent Meisner, 2023. "Report-Dependent Utility and Strategy-Proofness," Management Science, INFORMS, vol. 69(5), pages 2733-2745, May.
    12. Antler, Yair & Bachi, Benjamin, 2019. "Searching Forever After," CEPR Discussion Papers 14103, C.E.P.R. Discussion Papers.
    13. Natsumi Shimada, 2022. "An experimental study on strategic preference formation in two-sided matching markets," ISER Discussion Paper 1169, Institute of Social and Economic Research, Osaka University.
    14. Vincent Iehlé, 2016. "Gradual College Admisssion," Post-Print halshs-02367006, HAL.
    15. Meisner, Vincent, 2021. "Report-Dependent Utility and Strategy-Proofness," Rationality and Competition Discussion Paper Series 289, CRC TRR 190 Rationality and Competition.
    16. Morimitsu Kurino & Yoshinori Kurokawa, 2024. "Job rotation or specialization? A dynamic matching model analysis," Review of Economic Design, Springer;Society for Economic Design, vol. 28(2), pages 243-273, June.
    17. Ahamad, Mazbahul, 2016. "Envious Preferences in Two-sided Matching," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235482, Agricultural and Applied Economics Association.
    18. Vincent Meisner & Jonas von Wangenheim, 2022. "Loss aversion in strategy-proof school-choice mechanisms," Papers 2207.14666, arXiv.org.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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