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Published January 2013 | Published
Journal Article Open

The Revealed Preference Theory of Stable and Extremal Stable Matchings


We investigate the testable implications of the theory of stable matchings. We provide a characterization of the matchings that are rationalizable as stable matchings when agents' preferences are unobserved. The characterization is a simple nonparametric test for stability, in the tradition of revealed preference tests. We also characterize the observed stable matchings when monetary transfers are allowed and the stable matchings that are best for one side of the market: extremal stable matchings. We find that the theory of extremal stable matchings is observationally equivalent to requiring that there be a unique stable matching or that the matching be consistent with unrestricted monetary transfers.

Additional Information

© 2013 The Econometric Society. Manuscript received May, 2011; final revision received March, 2012. Article first published online: 24 Jan. 2013. This paper evolved from Echenique, Lee, and Yenmez (2010) and contains generalizations of the theoretical results in Echenique, Lee, and Shum (2010), both of which are obsolete now. We thank Lars Ehlers for questions that motivated some of the current research.We are very grateful to the editor and anonymous referees for their comments on a previous draft.

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