Coalitional Stability in Matching Problems with Externalities and Random Preferences

30 Pages Posted: 18 Nov 2021 Last revised: 14 Dec 2023

See all articles by Adriana Piazza

Adriana Piazza

Department of Economics, University of Chile

Juan Pablo Torres-Martínez

Department of Economics, University of Chile

Date Written: November 1, 2021

Abstract

We study coalitional stability in matching problems with externalities, including marriage markets, roommate problems, and Shapley-Scarf housing markets as particular cases. When preferences are randomly determined, the probability of having a coalitionally stable solution is positively affected by three factors: the prudence of coalitions when evaluating a deviation, the social connectedness of those that can react to it, and the incidence of externalities in preferences. At the same time, this probability is negatively affected by the number of agreements that agents can implement to block a matching. In this context, if agents have a limited capacity to organize themselves into large coalitions, then coalitional stability holds asymptotically even when individuals become less and less prudent as the population grows.

Keywords: Matching Markets, Coalitional Stability, Externalities, Random Preferences

JEL Classification: D62, C78

Suggested Citation

Piazza, Adriana and Torres-Martínez, Juan Pablo, Coalitional Stability in Matching Problems with Externalities and Random Preferences (November 1, 2021). Available at SSRN: https://ssrn.com/abstract=3965063 or http://dx.doi.org/10.2139/ssrn.3965063

Adriana Piazza

Department of Economics, University of Chile ( email )

Diagonal Paraguay 257
Santiago, R. Metropolitana 7520421
Chile

Juan Pablo Torres-Martínez (Contact Author)

Department of Economics, University of Chile ( email )

HOME PAGE: http://www.econ.uchile.cl/es/academico/jutorres

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