A Unified Approach to Strategic Network Formation and Classical Matching Theory

15 Pages Posted: 5 Jun 2023

See all articles by Evan Sadler

Evan Sadler

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Date Written: May 18, 2023

Abstract

The literatures on network formation and matching have for the most part evolved independently from one another, despite addressing similar underlying questions. This paper offers a common framework. I study a general model of network formation without externalities — equivalently, a one-sided many-to-many matching model — giving conditions for the existence and uniqueness of stable graphs and proving a strong version of the rural hospital theorem. Special cases contain and extend classic results for the roommate problem and two-sided matching markets. An iterated deletion algorithm adapted from Gutin et al. (2022) provides a crucial tool, reducing a network formation game to a normal form with helpful properties.

Keywords: Network formation, matching, iterated deletion

JEL Classification: D85

Suggested Citation

Sadler, Evan, A Unified Approach to Strategic Network Formation and Classical Matching Theory (May 18, 2023). Available at SSRN: https://ssrn.com/abstract=4453801 or http://dx.doi.org/10.2139/ssrn.4453801

Evan Sadler (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

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New York, NY 10027
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