Efficiency of stable matchings with two-sided incomplete information

Yi-Chun Chen () and Samuel Ho ()
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Yi-Chun Chen: Department of Economics and Risk Management Institute, National University of Singapore
Samuel Ho: Department of Economics, Yale University

Theoretical Economics, Forthcoming

Abstract: We uncover an asymmetry in stable matching with two-sided incomplete information: Incomplete-information-stable matching outcomes must be efficient (ex post surplus-maximizing), when the agents’ premuneration values are submodular but not necessarily when their values are supermodular. We show that efficiency of incomplete-information-stable matching hinges on a condition that we call misassignment deduction. The condition requires that for each potential blocking pair of a mismatch, one of the two agents’ worst-case hypotheses contains only type assignments under which their status quo is a mismatch.

Keywords: Stable matching; incomplete information; two-sided incomplete information; incomplete-information stability; premuneration values; supermodularity; submodularity; misassignment deduction (search for similar items in EconPapers)
JEL-codes: C78 D40 D82 (search for similar items in EconPapers)
Date: 2026-09-04
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