The large and likely inefficiency of stable matching mechanisms

Josue Ortega, Gabriel Ziegler, R. Pablo Arribillaga and Geng Zhao

No 2026/22, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: We prove that any stable matching mechanism suffers from systematic inefficiency of striking magnitude: in large random markets, any stable allocation is Pareto-inefficient with high probability, and almost all students can simultaneously improve their placements without harming anyone else. We establish this result by showing that the envy digraph generated by the student-proposing Deferred Acceptance mechanism contains a unique giant strongly connected component, implying that nearly all students are improvable via trading cycles. Finally, we show that every maximal cycle packing covers almost all students, revealing a surprising asymptotic equivalence among all efficient mechanisms that Paretodominate DA.

Keywords: unimprovable students; school choice; random markets (search for similar items in EconPapers)
JEL-codes: C78 D47 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:343077

DOI: 10.17169/refubium-53176

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