The Welfare Effects of Pre-Arrangements in Matching Markets

16 Pages Posted: 25 Jul 2011 Last revised: 10 Aug 2011

See all articles by Mustafa Oguz Afacan

Mustafa Oguz Afacan

Stanford University - Department of Economics

Date Written: July 25, 2011

Abstract

We study the welfare effects of different types of pre-arrangements (as identified in Sonmez (1999)) under the intern-optimal and hospital-optimal stable mechanisms in matching markets. Both the mechanisms are manipulable via Type-2 pre-arrangements; they might cause inefficient outcomes to arise, and the welfare eff effects on each side are ambiguous in the sense that there might be agents from each side, apart from pre-arranging ones, being better and worse off . Then, for Type-1 pre-arrangements, due to Kojima and Pathak (2009), we know that the intern-optimal stable mechanism is immune to that type of manipulations. In contrast to this result, the hospital-optimal stable mechanism turns out to be manipulable via that way. More interestingly, they do not result in inefficient outcomes, and the welfare effects on each side are unambiguous: all hospitals (interns) are better (worse) off .

Suggested Citation

Afacan, Mustafa Oguz, The Welfare Effects of Pre-Arrangements in Matching Markets (July 25, 2011). Available at SSRN: https://ssrn.com/abstract=1894918 or http://dx.doi.org/10.2139/ssrn.1894918

Mustafa Oguz Afacan (Contact Author)

Stanford University - Department of Economics ( email )

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