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A Theory of Stability in Matching with Incomplete Information

  • Yi-Chun Chen
  • Gaoji Hu
American Economic Journal: Microeconomics
vol. 15, no. 1, February 2023
(pp. 288-322)
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Abstract

We provide a framework for studying two-sided matching markets with incomplete information. The framework accommodates two-sided incomplete information as well as heterogeneous information among the agents. We propose a notion called stability for a market state, which, based upon agents' information structure, requires (i) individual rationality, (ii) no blocking, and (iii) information stability. The novelty of our stability notion lies in how the agents evaluate a blocking prospect in the presence of general two-sided incomplete information. We show that a stable state exists; moreover, if a state is stable, then coarsening agents' information leads to another stable state.

Citation

Chen, Yi-Chun, and Gaoji Hu. 2023. "A Theory of Stability in Matching with Incomplete Information." American Economic Journal: Microeconomics, 15 (1): 288-322. DOI: 10.1257/mic.20200411

Additional Materials

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
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