Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions

22 Pages Posted: 18 May 2011 Last revised: 9 Jun 2012

Date Written: May 17, 2011

Abstract

I study the consistency of incentive compatibility with several stability notions for a one-to-one matching market with transfers. Ex post stability, studied in the matching literature, is too strong to be satisfi ed together with incentive compatibility. Therefore, I introduce weaker stability notions: ex ante stability and interim stability. Although ex ante stability is consistent with incentive compatibility when agents are ex ante identical or when the market is balanced, interim stability can only be satis fied when there is one agent on the short side of the market, as in auctions. Which stability is appropriate depends on when agents can block.

Keywords: Matching, incomplete information, stability, incentive compatibility, auctions, multidimensional types

JEL Classification: C72, C78, D82

Suggested Citation

Yenmez, M. Bumin, Incentive-Compatible Matching Mechanisms: Consistency with Various Stability Notions (May 17, 2011). Available at SSRN: https://ssrn.com/abstract=1844747 or http://dx.doi.org/10.2139/ssrn.1844747

M. Bumin Yenmez (Contact Author)

Boston College ( email )

140 Commonwealth Ave.
Maloney Hall 327
Chestnut Hill, MA 02467
United States

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