Credibility, efficiency, and stability: a theory of dynamic matching markets

Research output: Contribution to journalArticle

Abstract

We introduce a dynamic framework to analyze two-sided matching interactions that occur repeatedly over time, such as teacher–student matching or hospital–intern markets in Britain. We propose a dynamic concept of credible group stability and show that implementing a men-optimal stable matching in each period is credibly group-stable. The result holds for a women-optimal stable matching. A credibly group-stable dynamic matching is individually rational and immune to any defensible group deviations with an appropriate definition of defensibility. We obtain several policy implications for market design. Moreover, a sufficient condition for Pareto efficiency is given for finitely repeated markets.

Original languageEnglish
JournalJapanese Economic Review
DOIs
Publication statusAccepted/In press - 2019 Jan 1

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Keywords

  • Credibility
  • Dynamic matching market
  • Efficiency
  • Group stability

ASJC Scopus subject areas

  • Economics and Econometrics

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