Existence of Myopic-Farsighted Stable Sets in Matching Markets

45 Pages Posted: 12 Feb 2023 Last revised: 27 Feb 2025

See all articles by Battal Doğan

Battal Doğan

School of Economics, University of Bristol

Lars Ehlers

University of Montreal - Département de Sciences Economiques and CIREQ

Date Written: February 11, 2023

Abstract

In the context of one-to-one matching markets, we study myopic-farsighted stable sets, which are internally and externally stable when myopic agents consider the immediate payoffs from their deviations, while farsighted agents anticipate counter-deviations and consider their final payoffs. We constructively prove the existence of a (rational expectations) myopic-farsighted stable set, where farsighted agents receive a single payoff by always being matched with the same partners, while myopic agents may receive multiple payoffs. For myopic-farsighted weakly stable sets—where strict improvement is required only for some members of a deviating coalition—our results extend to many-to-one matching markets. As a key corollary, we provide a foundation for the outcome of the efficiency-adjusted deferred acceptance algorithm, showing that it forms a singleton myopic-farsighted stable set when one side is farsighted and the other is myopic.

Keywords: JEL Classification: C78, D70, J41, J44 Matching problems, stable sets, myopic and farsighted agents

JEL Classification: C78, D70, J41, J44

Suggested Citation

Doğan, Battal and Ehlers, Lars, Existence of Myopic-Farsighted Stable Sets in Matching Markets (February 11, 2023). Available at SSRN: https://ssrn.com/abstract=4354768 or http://dx.doi.org/10.2139/ssrn.4354768

Battal Doğan (Contact Author)

School of Economics, University of Bristol ( email )

United Kingdom

Lars Ehlers

University of Montreal - Département de Sciences Economiques and CIREQ ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

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