Incentives and Stability in Large Two-Sided Matching Markets
Posted: 30 Jan 2007
The paper analyzes the scope for manipulation in many-to-one matching markets (college admission problems) under the student-optimal stable mechanism when the number of participants is large and the length of the preference list is bounded. Under a mild independence assumption on the distribution of preferences for students, the fraction of colleges that have incentives to misrepresent their preferences approaches zero as the market becomes large. We show that truthful reporting is an approximate equilibrium under the student-optimal stable mechanism in large markets that are sufficiently thick, a condition that allows for certain types of heterogeneity in the distribution of student preferences.
Keywords: Large markets, stability, two-sided matching
JEL Classification: C78, D61, D78.
Suggested Citation: Suggested Citation