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Robust Design in Monotonic Matching Markets: A Case for Firm-Proposing Deferred-Acceptance

Lars Ehlers and Jordi Masso

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We study two-sided matching markets among workers and firms. Workers seek one position at a firm but firms may employ several workers. In many applications those markets are monotonic: leaving positions unfilled is costly as for instance, for hospitals this means not being able to provide full service to its patients. A huge literature has advocated the use of stable mechanisms for clearinghouses. The interests among workers and firms are polarized among stable mechanisms, most famously the firm-proposing DA and the worker-proposing DA. We show that for the firm-proposing DA ex-ante incentive compatibility and ex-post incentive compatibility are equivalent whereas this is not necessarily true for the worker-proposing DA. The firm-proposing DA turns out to be more robust than the worker-proposing DA under incomplete information when incentives of both sides of the market are important.

Keywords: many-to-one matching market; stability; incomplete information; monotonic responsive extensions; robust mechanism design (search for similar items in EconPapers)
JEL-codes: C78 D81 J44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-des and nep-gth
Date: 2018
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Working Paper: Robust design in monotonic matching markets: A case for firm-proposing deferred-acceptance (2018) Downloads
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