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Coalitional stability in matching problems with externalities and random preferences

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  • Piazza, Adriana
  • Torres-Martínez, Juan Pablo

Abstract

We study coalitional stability in matching problems with externalities, including marriage markets, roommate problems, and Shapley-Scarf housing markets as particular cases. When preferences are randomly determined, the probability of having a coalitionally stable solution is positively affected by three factors: the prudence of coalitions when evaluating a deviation, the social connectedness of those that can react to it, and the incidence of externalities in preferences. At the same time, this probability is negatively affected by the number of agreements that agents can implement to block a matching. In this context, if agents have a limited capacity to organize themselves into large coalitions, then coalitional stability holds asymptotically even when individuals become less and less prudent as the population grows.

Suggested Citation

  • Piazza, Adriana & Torres-Martínez, Juan Pablo, 2024. "Coalitional stability in matching problems with externalities and random preferences," Games and Economic Behavior, Elsevier, vol. 143(C), pages 321-339.
    • Handle: RePEc:eee:gamebe:v:143:y:2024:i:c:p:321-339
    DOI: 10.1016/j.geb.2023.12.002
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    More about this item

    Keywords

    Matching markets; Coalitional stability; Externalities; Random preferences;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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