The Marriage Model With Search Frictions
Posted: 12 Dec 2006
Consider a heterogeneous agent matching model in which the payoff of each matched individual is a fixed function of both partners' types. In a 1973 article, Becker showed that assortative matching arises in a frictionless setting simply if everyone prefers higher partners. This paper shows that if finding partners requires time-consuming search and individuals are impatient, then productive interaction matters. Matching is positively assortative - higher types match with higher sets of types - when the proportionate gains from having better partners rise in one's type. With multiplicatively separable payoffs, these proportionate gains are constant in one's type, and "block segregation" arises, a common finding of the literature.
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