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Existence and Testable Implications of Extreme Stable Matchings

Echenique, Federico and Lee, Sangmok and Yenmez, M. Bumin (2010) Existence and Testable Implications of Extreme Stable Matchings. Social Science Working Paper, 1337. California Institute of Technology , Pasadena, CA. (Unpublished) http://resolver.caltech.edu/CaltechAUTHORS:20170726-142324889

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Abstract

We investigate the testable implications of the theory that markets produce matchings that are optimal for one side of the market; i.e. stable extremal matchings. A leading justification for the theory is that markets proceed as if the deferred acceptance algorithm were in place. We find that the theory of stable extremal matching is observationally equivalent to requiring that there be a unique matching, or that the matching be consistent with unrestricted monetary transfers. We also present results on rationalizing a matching as the median stable matching. We work with a general model of matching, which encompasses aggregate and random matchings as special cases. As a consequence, we need to work with a notion of strong stability, and extend the standard theory on the existence and structure of extremal matchings.


Item Type:Report or Paper (Working Paper)
Additional Information:We thank Lars Ehlers for questions that motivated the current research.
Group:Social Science Working Papers
Subject Keywords:Revealed Preference, Two-sided Matching, Gale-Shapley, Tarski’s Fixed Point Theorem, Aggregate Matching, Random Matching
Classification Code:JEL: C78
Record Number:CaltechAUTHORS:20170726-142324889
Persistent URL:http://resolver.caltech.edu/CaltechAUTHORS:20170726-142324889
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79435
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:07 Aug 2017 21:45
Last Modified:07 Aug 2017 21:45

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