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On the importance of uniform sharing rules for efficient matching

Deniz Dizdar and Benny Moldovanu (mold@uni-bonn.de)

Journal of Economic Theory, 2016, vol. 165, issue C, 106-123

Abstract: The paper provides a possible explanation for the occurrence of uniform, fixed-proportion rules for sharing surplus in two-sided markets. We study a two-sided matching model with transferable utility where agents are characterized by privately known, multi-dimensional attributes that jointly determine the surplus of each potential partnership. We ask the following question: for what divisions of surplus within matched pairs is it possible to implement the efficient (surplus-maximizing) matching? Our main result shows that the only robust rules compatible with efficient matching are those that divide realized surplus in a fixed proportion, independently of the attributes of the pair's members: each agent must expect to get the same fixed percentage of surplus in every conceivable match. A more permissive result is obtained for one-dimensional attributes and supermodular surplus functions.

Keywords: Matching; Surplus division; Premuneration values; Interdependent values; Multi-dimensional attributes (search for similar items in EconPapers)
JEL-codes: C78 D82 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:165:y:2016:i:c:p:106-123

DOI: 10.1016/j.jet.2016.04.010

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