A Theory of Stability in Matching with Incomplete Information

Yi-Chun Chen and Gaoji Hu

American Economic Journal: Microeconomics, 2023, vol. 15, issue 1, 288-322

Abstract: We provide a framework for studying two-sided matching markets with incomplete information. The framework accommodates two-sided incomplete information as well as heterogeneous information among the agents. We propose a notion called stability for a market state, which, based upon agents' information structure, requires (i) individual rationality, (ii) no blocking, and (iii) information stability. The novelty of our stability notion lies in how the agents evaluate a blocking prospect in the presence of general two-sided incomplete information. We show that a stable state exists; moreover, if a state is stable, then coarsening agents' information leads to another stable state.

JEL-codes: C78 D83 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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DOI: 10.1257/mic.20200411

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