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Stable matching under forward-induction reasoning

Pomatto, Luciano (2022) Stable matching under forward-induction reasoning. Theoretical Economics, 17 (4). pp. 1619-1649. ISSN 1933-6837. doi:10.3982/te3867.

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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.

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Pomatto, Luciano0000-0002-4331-8436
Additional Information:© 2022 The Author. Licensed under the Creative Commons Attribution-NonCommercial License 4.0. I am indebted to Alvaro Sandroni and Marciano Siniscalchi for many useful discussions. I would like to the thank the referees for their comments and suggestions. I also thank Pierpaolo Battigalli, Yi-Chun Chen, Willemien Kets, George Mailath, Larry Samuelson, Rakesh Vohra, and several seminar audiences for helpful comments on earlier drafts.
Issue or Number:4
Record Number:CaltechAUTHORS:20221219-416589000.7
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:118481
Deposited By: Research Services Depository
Deposited On:19 Jan 2023 18:16
Last Modified:19 Jan 2023 18:16

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