Dynamic Directed Random Matching

Darrell Duffie, Lei Qiao and Yeneng Sun

No 21731, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a general and unified model in which a continuum of agents conduct directed random searches for counterparties. Our results provide the first probabilistic foundation for static and dynamic models of directed search (including the matching-function approach) that are common in search-based models of financial markets, monetary theory, and labor economics. The agents' types are shown to be independent discrete-time Markov processes that incorporate the effects of random mutation, random matching with match-induced type changes, and with the potential for enduring partnerships that may have randomly timed break-ups. The multi-period cross-sectional distribution of types is shown to be deterministic and is calculated using the exact law of large numbers.

JEL-codes: C78 D83 E41 G12 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-dge, nep-gth, nep-mac and nep-mic
Note: AP
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Published as Darrell Duffie & Lei Qiao & Yeneng Sun, 2018. "Dynamic directed random matching," Journal of Economic Theory, vol 174, pages 124-183.

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Related works:
Journal Article: Dynamic directed random matching (2018)
Working Paper: Dynamic Directed Random Matching (2017)
Working Paper: Dynamic Directed Random Matching (2015)
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