Unravelling in Two-Sided Matching Markets and Similarity of Preferences

Games and Economic Behavior 69, no. 2 (2010): 365–393

38 Pages Posted: 16 Oct 2008 Last revised: 4 Jul 2019

See all articles by Hanna Halaburda

Hanna Halaburda

Bank of Canada; New York University (NYU) - Leonard N. Stern School of Business; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 15, 2008

Abstract

This paper investigates the causes and welfare consequences of unravelling in two-sided matching markets. It shows that similarity of preferences is an important factor driving unravelling. In particular, it shows that under the ex-post stable mechanism (the mechanism that the literature focuses on), unravelling is more likely to occur when participants have more similar preferences. It also shows that any Pareto-optimal mechanism must prevent unravelling, and that the ex-post stable mechanism is Pareto-optimal if and only if it prevents unravelling.

Keywords: two-sided matching, unravelling, similarity of preferences

JEL Classification: C72, C78, D82

Suggested Citation

Halaburda, Hanna, Unravelling in Two-Sided Matching Markets and Similarity of Preferences (October 15, 2008). Games and Economic Behavior 69, no. 2 (2010): 365–393. Available at SSRN: https://ssrn.com/abstract=1285331 or http://dx.doi.org/10.2139/ssrn.1285331

Hanna Halaburda (Contact Author)

Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Munich
Germany

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