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Truthtelling in Matching Markets

Jeanne Hagenbach, Frederic Koessler and Thomas Tregouet ()

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Abstract: We analyze a search and matching model with non-transferable utility and asymmetric information. Randomly paired agents go through an evaluation phase, at the end of which they discover each other's types and choose to match or not. Before deciding to enter this phase, agents can communicate through cheap talk. We provide conditions for this communication to be informative, and we examine how it affects agents' welfare. We show that communication is Pareto-improving only when the matching is assortative in the absence of communication and left unchanged by information transmission.

Date: 2017-10
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Published in Scandinavian Journal of Economics, Wiley, 2017, 119 (4), pp.882 - 909. ⟨10.1111/sjoe.12203⟩

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DOI: 10.1111/sjoe.12203

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