Strategic disaggregation in matching markets

Stephen Nei and Bobak Pakzad-Hurson

Journal of Economic Theory, 2021, vol. 197, issue C

Abstract: Decisions agents make before and after matching can be strategically linked through the match. We demonstrate this linkage in a game where universities either require students to commit to majors before matriculating or allow students to pick majors during their studies. The interaction between “matching forces” (competition for higher quality students) and “principal-agent forces” (moral hazard and adverse selection) leads to two equilibria that mirror the admissions systems in the US and England. With monetary transfers, our model provides insights into athletic scholarships. Payment caps that restrict transfers to potential athletes who decide not to play sports can maximize welfare.

Keywords: Matching with contracts; College admissions; Athletic scholarships (search for similar items in EconPapers)
JEL-codes: C78 D61 D78 I21 I23 (search for similar items in EconPapers)
Date: 2021
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:197:y:2021:i:c:s0022053121001460

DOI: 10.1016/j.jet.2021.105329

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