Assignment games with externalities revisited

Jens Gudmundsson and Helga Habis

Economic Theory Bulletin, 2017, vol. 5, issue 2, No 11, 247-257

Abstract: Abstract We study assignment games with externalities. The value that a firm and a worker create depends on the matching of the other firms and workers. We ask how the classical results on assignment games are affected by the presence of externalities. The answer is that they change dramatically. Though stable outcomes exist if agents are “pessimistic”, this is a knife-edge result: we show that there are problems in which the slightest optimism by a single pair erases all stable outcomes. If agents are sufficiently optimistic, then there need not exist stable outcomes even if externalities are vanishingly small. The negative result persists also when we impose a very restrictive structure on the values and the externalities. Furthermore, stability and efficiency no longer go hand in hand and the set of stable outcomes need not form a lattice with respect to the agents’ payoffs.

Keywords: Two-sided matching; Assignment games; Externalities; Stability (search for similar items in EconPapers)
JEL-codes: C71 C78 D62 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s40505-017-0117-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-017-0117-4

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40505

DOI: 10.1007/s40505-017-0117-4

Access Statistics for this article

Economic Theory Bulletin is currently edited by Nicholas C. Yannelis

More articles in Economic Theory Bulletin from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().