Stable marriages and search frictions

Lauermann, Stephan and Nöldeke, Georg. (2014) Stable marriages and search frictions. Journal of Economic Theory, 151. pp. 163-195.

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Official URL: http://edoc.unibas.ch/dok/A6243477

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Stable matchings are the primary solution concept for two-sided matching markets with nontransferable utility. We investigate the strategic foundations of stability in a decentralized matching market. Towards this end, we embed the standard marriage markets in a search model with random meetings. We study the limit of steady-state equilibria as exogenous frictions vanish. The main result is that convergence of equilibrium matchings to stable matchings is guaranteed if and only if there is a unique stable matching in the underlying marriage market. Whenever there are multiple stable matchings, sequences of equilibrium matchings converging to unstable, inefficient matchings can be constructed. Thus, vanishing frictions do not guarantee the stability and efficiency of decentralized marriage markets.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Mikroökonomische Theorie (Nöldeke)
UniBasel Contributors:Nöldeke, Georg
Item Type:Article, refereed
Article Subtype:Research Article
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:27 Nov 2017 16:21
Deposited On:10 Apr 2015 09:12

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