Matching with Multilateral Contracts
51 Pages Posted: 6 Jul 2017
Date Written: July 2, 2017
The matching literature has focused on bilateral agreements. In this paper, we examine stability in environments where groups of agents interact. We do so by extending the matching with contracts (Hatfield and Milgrom (2005)) framework to allow for agreements among more than two agents and those which have externalities. In so doing, we offer a framework unifying the matching, network formation, and coalition formation literatures. In both transferable and nontransferable utility environments, we give results on existence, uniqueness, and efficiency of stable outcomes in environments with substitutes and those with complements. We also provide comparative statics results, showing how stable outcomes change when agreements are bundled together.
Keywords: Multilateral Matching, Matching with Contracts, Networks, Coalition Formation, Stability, Contract Design
JEL Classification: C78, C62, D47, D85, L14, F51, F55
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