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Stable matching under forward-induction reasoning

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  • Pomatto, Luciano

    (Division of the Humanities and Social Sciences, Caltech)

Abstract

A standing question in the theory of matching markets is how to define stability under incomplete information. This paper proposes an epistemic approach. Agents negotiate through offers, and offers are interpreted according to the highest possible degree of rationality that can be ascribed to their proponents. A matching is deemed ``stable'' if maintaining the current allocation is a rationalizable action for each agent. The main result shows an equivalence between this notion and ``incomplete-information stability,'' a cooperative solution concept put forward by Liu, Mailath, Postlewaite and Samuelson (2014) for markets with incomplete information.

Suggested Citation

  • Pomatto, Luciano, 2022. "Stable matching under forward-induction reasoning," Theoretical Economics, Econometric Society, vol. 17(4), November.
    • Handle: RePEc:the:publsh:3867
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    References listed on IDEAS

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    Cited by:

    1. Kamishiro, Yusuke & Vohra, Rajiv & Serrano, Roberto, 2023. "Signaling, screening, and core stability," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Huang, Xuesong, 2024. "Sophisticated banking contracts and fragility when withdrawal information is public," Theoretical Economics, Econometric Society, vol. 19(1), January.
    3. Chen, Yi-Chun & Hu, Gaoji, 2024. "Bayesian stable states," Games and Economic Behavior, Elsevier, vol. 145(C), pages 102-116.

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    More about this item

    Keywords

    Matching; stability; incomplete information; rationalizability;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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