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Strategic Uncertainty and Unraveling in Matching Markets

Echenique, Federico and Pereyra, Juan Sebastián (2013) Strategic Uncertainty and Unraveling in Matching Markets. Social Science Working Paper, 1373. California Institute of Technology , Pasadena, California.

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We present a theoretical explanation of inefficient early matching in matching markets. Our explanation is based on strategic uncertainty and strategic unraveling. We identify a negative externality imposed on the rest of the market by agents who make early offers. As a consequence, an agent may make an early offer because she is concerned that others are making early offers. Yet other agents make early offers because they are concerned that others worry about early offers; and so on and so forth. The end result is that any given agent is more likely to make an early offer than a later offer.

Item Type:Report or Paper (Working Paper)
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Additional Information:April 15, 2013. We are grateful to David Cantala, Seraffin Frache, Drew Fudenberg, Andres Sambarino, Juan Gabriel Brida, Doron Zeilberger, Szilvia Papai, Renzo Sprugnoli, Christoph Koutschan, Marcelo Lanzilotta, Gaston Cayssials, Damian Gibaja, Pablo Sanchez Buelna, Benjamin Tello for their comments and suggestions and the seminar participants at the Free University of Bolzano.
Group:Social Science Working Papers
Subject Keywords:Two-sided matching; unraveling; strategic complementarity; assortative matching
Classification Code:JEL C72; D78; D82
Record Number:CaltechAUTHORS:20160321-134856275
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65548
Deposited By: Susan Vite
Deposited On:22 Mar 2016 20:50
Last Modified:28 Nov 2017 23:05

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