Exploding offers and unraveling in two-sided matching markets
Siqi Pan ()
Additional contact information
Siqi Pan: The University of Melbourne
International Journal of Game Theory, 2018, vol. 47, issue 1, 351-373
Abstract Many two-sided matching markets tend to unravel in time with transactions becoming inefficiently early. In a two-period decentralized model, this paper shows that when a market culture allows firms to make exploding offers, unraveling is more likely to occur and lead to a less socially desirable matching outcome. A market with a larger uncertainty in early stages is not necessarily more vulnerable to the presence of exploding offers: the conclusion depends on the specific information structure. A market tends to be less vulnerable to exploding offers when there is an excess supply of labor. While a banning policy on exploding offers tends to be supported by high quality firms and workers, it can be opposed by those of low qualities. This explains the prevalence of exploding offers in practice.
Keywords: Two-sided matching; Unraveling; Exploding offer; Signal accuracy; Labor demand and supply; Stable matching (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s00182-017-0593-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jogath:v:47:y:2018:i:1:d:10.1007_s00182-017-0593-7
Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/182/PS2
Access Statistics for this article
International Journal of Game Theory is currently edited by Shmuel Zamir, Vijay Krishna and Bernhard von Stengel
More articles in International Journal of Game Theory from Springer, Game Theory Society
Bibliographic data for series maintained by Sonal Shukla ().