Large Matching Markets as Two-Sided Demand Systems

Konrad Menzel

    Research output: Contribution to journalArticle

    Abstract

    This paper studies two-sided matching markets with non-transferable utility when the number of market participants grows large. We consider a model in which each agent has a random preference ordering over individual potential matching partners, and agents' types are only partially observed by the econometrician. We show that in a large market, the inclusive value is a sufficient statistic for an agent's endogenous choice set with respect to the probability of being matched to a spouse of a given observable type. Furthermore, while the number of pairwise stable matchings for a typical realization of random utilities grows at a fast rate as the number of market participants increases, the inclusive values resulting from any stable matching converge to a unique deterministic limit. We can therefore characterize the limiting distribution of the matching market as the unique solution to a fixed-point condition on the inclusive values. Finally we analyze identification and estimation of payoff parameters from the asymptotic distribution of observable characteristics at the level of pairs resulting from a stable matching.

    Original languageEnglish (US)
    Pages (from-to)897-941
    Number of pages45
    JournalEconometrica
    Volume83
    Issue number3
    DOIs
    StatePublished - May 1 2015

    Fingerprint

    Matching markets
    Demand systems
    Stable matching
    Two-sided matching
    Non-transferable utility
    Fixed point
    Spouses
    Asymptotic distribution
    Sufficient statistics
    Choice sets
    Limiting distribution
    Random utility

    Keywords

    • Discrete choice
    • Large games
    • Matching markets
    • Multiple equilibria
    • Pairwise stability

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Large Matching Markets as Two-Sided Demand Systems. / Menzel, Konrad.

    In: Econometrica, Vol. 83, No. 3, 01.05.2015, p. 897-941.

    Research output: Contribution to journalArticle

    Menzel, Konrad. / Large Matching Markets as Two-Sided Demand Systems. In: Econometrica. 2015 ; Vol. 83, No. 3. pp. 897-941.
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