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Matching to share risk

Author

Listed:
  • Chiappori, Pierre-André

    (Department of Economics, Columbia University)

  • Reny, Philip J.

    (Department of Economics, University of Chicago)

Abstract

We consider a matching model in which individuals belonging to two populations (\textquotedblleft males\textquotedblright\ and \textquotedblleft females\textquotedblright ) can match to share their exogenous income risk. Within each population, individuals can be ranked by risk aversion in the Arrow-Pratt sense. The model permits non transferable utility, a context in which few general results have previously been derived. We show that in this framework a stable matching always exists, it is generically unique, and it is negatively assortative: for any two matched couples, the more risk averse male is matched with the less risk averse female.

Suggested Citation

  • Chiappori, Pierre-André & Reny, Philip J., 2016. "Matching to share risk," Theoretical Economics, Econometric Society, vol. 11(1), January.
    • Handle: RePEc:the:publsh:1914
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Negatively assortative matching; risk-sharing; stable match;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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