EconPapers    
Economics at your fingertips  
 

The Theory of Assortative Matching Based on Costly Signals

Heidrun Hoppe-Wewetzer, Benny Moldovanu (mold@uni-bonn.de) and Aner Sela

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We study two-sided markets with a finite numbers of agents on each side, and with two-sided incomplete information. Agents are matched assortatively on the basis of costly signals. A main goal is to identify conditions under which the potential increase in expected output due to assortative matching (relative to random matching) is completely offset by the costs of signalling. We also study how the signalling activity and welfare on each side of the market change when we vary the number of agents and the distribution of their attributes, thereby displaying effects that are particular to small markets. Finally, we look at the continuous version of our two-sided market model and establish the connections to the finite version. Technically, the paper is based on the very elegant theory about stochastic ordering of (normalized) spacings and other linear combinations of order statistics from distributions with monotone failure rates, pioneered by R. Barlow and F. Proschan (1966, 1975) in the framework of reliability theory.

Date: 2005-12
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://epub.ub.uni-muenchen.de/13466/1/85.pdf (application/pdf)

Related works:
Journal Article: The Theory of Assortative Matching Based on Costly Signals (2009) Downloads
Working Paper: The Theory of Assortative Matching Based on Costly Signals (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:trf:wpaper:85

Access Statistics for this paper

More papers in Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich Geschwister-Scholl-Platz 1, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg (sfb-tr15@vwl.uni-muenchen.de).

 
Page updated 2024-12-28
Handle: RePEc:trf:wpaper:85