Decentralized Matching with Aligned Preferences
41 Pages Posted: 7 Apr 2009 Last revised: 11 Nov 2013
Date Written: April 2009
We study a simple model of a decentralized market game in which firms make directed offers to workers. We focus on markets in which agents have aligned preferences. When agents have complete information or when there are no frictions in the economy, there exists an equilibrium that yields the stable match. In the presence of market frictions and preference uncertainty, harsher assumptions on the richness of the economy have to be made in order for decentralized markets to generate stable outcomes in equilibrium.
Suggested Citation: Suggested Citation