Random Paths to Pairwise Stability in Many-to-Many Matching Problems: A Study on Market Equilibration

Abstract:     
This paper considers a decentralized process in many-to-many matching problems. We show that if agents on one side of the market have substitutable preferences and those on the other side have responsive preferences, then, from an arbitrary matching, there exists a finite path of matchings such that each matching on the path is formed by satisfying a blocking individual or a blocking pair for the previous matching, and the final matching is pairwise-stable. This implies that an associated stochastic process converges to a pairwise-stable matching in finite time with probability one, if each blocking individual or pair is satisfied with a positive probability at each period along the process.

Number of Pages in PDF File: 20

Keywords: Many-to-many matching, pairwise stability, stability, random paths

JEL Classification: C71, C78

working papers series