Stability, Strategy-Proofness, and Cumulative Offer Mechanisms

Stability and Incentives for College Admissions with Budget Constraints

John William Hatfield, Scott Kominers and Alexander Westkamp

The Review of Economic Studies, 2021, vol. 88, issue 3, 1457-1502

Abstract: We characterize when a stable and strategy-proof mechanism is guaranteed to exist in the setting of many-to-one matching with contracts. We introduce three novel conditions—observable substitutability, observable size monotonicity, and non-manipulability via contractual terms—and show that when these conditions are satisfied, the cumulative offer mechanism is the unique mechanism that is stable and strategy-proof (for workers). Moreover, we show that our three conditions are, in a sense, necessary: if the choice function of some firm fails any of our three conditions, we can construct unit-demand choice functions for the other firms such that no stable and strategy-proof mechanism exists. Thus, our results provide a rationale for the ubiquity of cumulative offer mechanisms in practice.

Keywords: Matching with contracts; Stability; Strategy-proofness; Substitutability; Size monotonicity; Cumulative offer mechanism; C62; C78; D44; D47 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:88:y:2021:i:3:p:1457-1502.

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