Matching in Closed-Form: Equilibrium, Identification, and Comparative Statics

Raicho Bojilov (raicho.bojilov@uc.cl) and Alfred Galichon

Papers from arXiv.org

Abstract: This paper provides closed-form formulas for a multidimensional two-sided matching problem with transferable utility and heterogeneity in tastes. When the matching surplus is quadratic, the marginal distributions of the characteristics are normal, and when the heterogeneity in tastes is of the continuous logit type, as in Choo and Siow (J Polit Econ 114:172-201, 2006), we show that the optimal matching distribution is also jointly normal and can be computed in closed form from the model primitives. Conversely, the quadratic surplus function can be identified from the optimal matching distribution, also in closed-form. The closed-form formulas make it computationally easy to solve problems with even a very large number of matches and allow for quantitative predictions about the evolution of the solution as the technology and the characteristics of the matching populations change.

Date: 2021-02, Revised 2021-02
New Economics Papers: this item is included in nep-des and nep-upt
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Citations: View citations in EconPapers (3)

Published in Economic Theory 61 (2016) pp.587-609

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2102.04295

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