Unobserved Heterogeneity in Matching Games
Jeremy Fox,
Chenyu Yang and
David H. Hsu
Journal of Political Economy, 2018, vol. 126, issue 4, 1339 - 1373
Abstract:
Agents in two-sided matching games vary in characteristics that are unobservable in typical data on matching markets. We investigate the identification of the distribution of unobserved characteristics using data on who matches with whom. In full generality, we consider many-to-many matching and matching with trades. The distribution of match-specific unobservables cannot be fully recovered without information on unmatched agents, but the distribution of a combination of unobservables, which we call unobserved complementarities, can be identified. Using data on unmatched agents restores identification.
Date: 2018
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