Matching with Contracts
- (pp. 913-935)
AbstractWe develop a model of matching with contracts which incorporates, as special cases, the college admissions problem, the Kelso-Crawford labor market matching model, and ascending package auctions. We introduce a new "law of aggregate demand" for the case of discrete heterogeneous workers and show that, when workers are substitutes, this law is satisfied by profit-maximizing firms. When workers are substitutes and the law is satisfied, truthful reporting is a dominant strategy for workers in a worker-offering auction/matching algorithm. We also parameterize a large class of preferences satisfying the two conditions.
CitationHatfield, John William, and Paul R. Milgrom. 2005. "Matching with Contracts." American Economic Review, 95 (4): 913-935. DOI: 10.1257/0002828054825466
- C78 Bargaining Theory; Matching Theory
- J41 Labor Contracts