Stable marriages and search frictions

Stephan Lauermann and Georg Nöldeke

Journal of Economic Theory, 2014, vol. 151, issue C, 163-195

Abstract: Stable matchings are the primary solution concept for two-sided matching markets with nontransferable utility. We investigate the strategic foundations of stability in a decentralized matching market. Towards this end, we embed the standard marriage markets in a search model with random meetings. We study the limit of steady-state equilibria as exogenous frictions vanish. The main result is that convergence of equilibrium matchings to stable matchings is guaranteed if and only if there is a unique stable matching in the underlying marriage market. Whenever there are multiple stable matchings, sequences of equilibrium matchings converging to unstable, inefficient matchings can be constructed. Thus, vanishing frictions do not guarantee the stability and efficiency of decentralized marriage markets.

Keywords: Marriage market; Nontransferable utility; Stable matchings; Search frictions (search for similar items in EconPapers)
JEL-codes: C78 D83 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Stable Marriages and Search Frictions (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:151:y:2014:i:c:p:163-195

DOI: 10.1016/j.jet.2013.11.001

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