Cost of transformation: a measure on matchings

Burak Can, Mohsen Pourpouneh () and Ton Storcken ()
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Mohsen Pourpouneh: Department of Food and Resource Economics, University of Copenhagen
Ton Storcken: Department of Quantitative Economics, Maastricht University

No 2020/10, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: This paper constructs a normative framework to quantify the difference (distance) between outcomes of market mechanisms in matching markets. We investigate the "cost of transformation" from one market mechanism to another, based on the differences in the outputs of these mechanisms, i.e., the matchings. Several conditions are introduced to ensure that this cost reflects the welfare effect of the transformation on individuals. We find a class of measures called scaled Borda measures, which is characterized by these conditions. Several possible applications of these measures in different markets are also discussed, such as measuring how unstable, how unfair, or how inefficient a mechanism (or a matching) is.

Keywords: matching markets; distance function; metrics; cost of stability (search for similar items in EconPapers)
JEL-codes: C78 D61 D63 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2020-08
New Economics Papers: this item is included in nep-des
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