Strategic Disaggregation in Matching Markets

116 Pages Posted: 14 Nov 2014 Last revised: 16 Jun 2021

See all articles by Stephen Nei

Stephen Nei

University of Oxford - Nuffield College; Stanford University - Department of Economics; University of Oxford - Department of Economics

Bobak Pakzad-Hurson

Brown University - Department of Economics

Date Written: June 15, 2021

Abstract

Decisions agents make before and after matching can be strategically linked through the match. We demonstrate this linkage in a game where universities either require students to commit to majors before matriculating or allow students to pick majors during their studies. The interaction between "matching forces'' (competition for higher quality students) and "principal-agent forces'' (moral hazard and adverse selection) leads to two equilibria that mirror the admissions systems in the US and England. With monetary transfers, our model provides insights into athletic scholarships. Payment caps that restrict transfers to potential athletes who decide not to play sports can maximize welfare.

Keywords: Matching with contracts, college admissions, athletic scholarships

JEL Classification: C78, D61, D78, I21, I23

Suggested Citation

Nei, Stephen and Pakzad-Hurson, Bobak, Strategic Disaggregation in Matching Markets (June 15, 2021). Available at SSRN: https://ssrn.com/abstract=2523224 or http://dx.doi.org/10.2139/ssrn.2523224

Stephen Nei

University of Oxford - Nuffield College ( email )

Oxford
United Kingdom

HOME PAGE: http://https://sites.google.com/site/sneissite/

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

HOME PAGE: http://www.stanford.edu/~snei

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

Bobak Pakzad-Hurson (Contact Author)

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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