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Contracts versus salaries in matching: A general result

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  • Schlegel, Jan Christoph

Abstract

It is shown that a matching market with contracts can be embedded into a matching market with salaries under weaker conditions than substitutability of contracts. In particular, the result applies to the recently studied problem of cadet-to-branch matching. As an application of the embedding result, a new class of mechanisms for matching markets with contracts is defined that generalize the firm-proposing deferred acceptance algorithm to the case where contracts are unilateral substitutes for firms.

Suggested Citation

  • Schlegel, Jan Christoph, 2015. "Contracts versus salaries in matching: A general result," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 552-573.
    • Handle: RePEc:eee:jetheo:v:159:y:2015:i:pa:p:552-573
    DOI: 10.1016/j.jet.2015.07.015
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    References listed on IDEAS

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    16. Roth, Alvin E, 1984. "Stability and Polarization of Interests in Job Matching," Econometrica, Econometric Society, vol. 52(1), pages 47-57, January.
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    Cited by:

    1. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    2. Hirata, Daisuke & 平田, 大祐 & Kasuya, Yusuke & 糟谷, 祐介 & Okumura, Yasunori & 奥村, 保規, 2023. "Stability, Strategy-Proofness, and Respect for Improvements," Discussion Papers 2023-01, Graduate School of Economics, Hitotsubashi University.
    3. Kominers, Scott Duke & Sönmez, Tayfun, 2016. "Matching with slot-specific priorities: theory," Theoretical Economics, Econometric Society, vol. 11(2), May.
    4. Schlegel, Jan Christoph, 2020. "Equivalent choice functions and stable mechanisms," Games and Economic Behavior, Elsevier, vol. 123(C), pages 41-53.
    5. Kyle Greenberg & Parag A. Pathak & Tayfun Sönmez, 2024. "Redesigning the US Army's Branching Process: A Case Study in Minimalist Market Design," American Economic Review, American Economic Association, vol. 114(4), pages 1070-1106, April.
    6. Chao Huang, 2023. "Concave many-to-one matching," Papers 2309.04181, arXiv.org.
    7. Kyle Greenberg & Parag A. Pathak & Tayfun Sönmez, 2020. "Mechanism Design meets Priority Design: Redesigning the US Army’s Branching Process Through Market Design," Boston College Working Papers in Economics 1035, Boston College Department of Economics.
    8. Jan Christoph Schlegel, 2016. "Virtual Demand and Stable Mechanisms," Cahiers de Recherches Economiques du Département d'économie 16.11, Université de Lausanne, Faculté des HEC, Département d’économie.
    9. Chao Huang, 2022. "Two-sided matching with firms' complementary preferences," Papers 2205.05599, arXiv.org, revised May 2022.
    10. Hassidim, Avinatan & Romm, Assaf & Shorrer, Ran I., 2019. "Contracts are not salaries in the hidden-substitutes domain," Economics Letters, Elsevier, vol. 181(C), pages 40-42.
    11. Kyle Greenberg & Parag A. Pathak & Tayfun Sonmez, 2021. "Mechanism Design meets Priority Design: Redesigning the US Army's Branching Process," Papers 2106.06582, arXiv.org.
    12. Hirata, Daisuke & Kasuya, Yusuke, 2017. "On stable and strategy-proof rules in matching markets with contracts," Journal of Economic Theory, Elsevier, vol. 168(C), pages 27-43.
    13. Hatfield, John William & Kominers, Scott Duke, 2017. "Contract design and stability in many-to-many matching," Games and Economic Behavior, Elsevier, vol. 101(C), pages 78-97.

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    More about this item

    Keywords

    Matching with contracts; Matching with salaries; Embedding; Substitutes; Unilateral substitutes; Bilateral substitutes;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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