Published January 2016
| Published
Journal Article
Open
Strategic complementarities and unraveling in matching markets
Chicago
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Abstract
We present a theoretical explanation of inefficient early matching in matching markets. Our explanation is based on strategic complementarities and strategic unraveling. We identify a negative externality imposed on the rest of the market by agents who make early offers. As a consequence, an agent may make an early offer because she is concerned that others are making early offers. Yet other agents make early offers because they are concerned that others worry about early offers, and so on and so forth. The end result is that any given agent is more likely to make an early offer than a late offer.
Additional Information
© 2016 Federico Echenique and Juan Sebastián Pereyra. Licensed under the Creative Commons Attribution-NonCommercial License 3.0. Submitted 2014-4-13. Final version accepted 2014-11-3. Available online 2014-11-7. We are grateful to David Cantala, Serafín Frache, Drew Fudenberg, Andrés Sambarino, Juan Gabriel Brida, Doron Zeilberger, Szilvia Pápai, Renzo Sprugnoli, Christoph Koutschan, Kaniska Dam, Francis Bloch, Estelle Cantillon, Patrick Legros, Alvaro Forteza, Juan Dubra, Néstor Gandelman, Andrei Gomberg, Julio Davila, CésarMartinelli, Gastón Cayssials, and Alberto Pinto for their comments and suggestions, as well as seminar participants at Paris School of Economics, 19th Coalition Theory Network Workshop, ITAM, ORT–Uruguay, DECON–Uruguay, Universidad de Montevideo, CORE–UCL, ECARES, and Computer Science Department at ULB, the Free University of Bolzano, and El Colegio de México. Finally, we are very grateful to the co-editor and two anonymous referees for their suggestions, which have led to a much improved version of the paper. Pereyra gratefully acknowledges financial support from ERC Grant 208535. This paper was previously circulated under the title "Strategic uncertainty and unraveling in matching markets."Attached Files
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Additional details
- Alternative title
- Strategic uncertainty and unraveling in matching markets
- Eprint ID
- 64774
- Resolver ID
- CaltechAUTHORS:20160225-150950399
- European Research Council (ERC)
- 208535
- Created
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2016-02-25Created from EPrint's datestamp field
- Updated
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2021-11-10Created from EPrint's last_modified field