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Targeted Search in Matching Markets

Anton Cheremukhin, Paulina Restrepo-Echavarria and Antonella Tutino ()

No 2014-35, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We propose a parsimonious matching model where a person's choice of whom to meet endogenizes the degree of randomness in matching. The analysis highlights the interaction between a productive motive, driven by the surplus attainable in a match, and a strategic motive, driven by reciprocity of interest of potential matches. We find that the interaction between these two motives differs with preferences?vertical versus horizontal?and that this interaction implies that preferences recovered using our model can look markedly different from those recovered using a model where the degree of randomness is not endogenous. We illustrate these results using data on the U.S. marriage market and show that the model can rationalize the finding of aspirational dating.

Keywords: Search; preferences; endogenous randomness; matching (search for similar items in EconPapers)
JEL-codes: C78 J64 D83 E24 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2013-08-23, Revised 2015-02-17
New Economics Papers: this item is included in nep-dge, nep-gth, nep-mac, nep-mic and nep-ore
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Working Paper: Targeted search in matching markets (2016) Downloads
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DOI: 10.20955/wp.2014.035

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