Stable Matching with Incomplete Information (Second Version)
55 Pages Posted: 7 Nov 2012
Date Written: October 28, 2012
Abstract
We formulate a notion of stable outcomes in matching problems with one-sided asymmetric information. The key conceptual problem is to formulate a notion of a blocking pair that takes account of the inferences that the uninformed agent might make from the hypothesis that the current allocation is stable. We show that the set of stable outcomes is nonempty in incomplete information environments, and is a superset of the set of complete-information stable outcomes. We then provide sufficient conditions for incomplete-information stable matchings to be efficient. Lastly, we define a notion of price sustainable allocations and show that the set of incomplete- information stable matchings is a subset of the set of such allocations.
Keywords: Matching, Stability, Stable outcome, Incomplete information, Core
JEL Classification: C71, C78, D5, D8
Suggested Citation: Suggested Citation