Decentralized Matching with Aligned Preferences

Muriel Niederle, Leeat Yariv

NBER Working Paper No. 14840
Issued in April 2009
NBER Program(s):   IO   LS

We study a simple model of a decentralized market game in which firms make directed offers to workers. We focus on markets in which agents have aligned preferences. When agents have complete information or when there are no frictions in the economy, there exists an equilibrium that yields the stable match. In the presence of market frictions and preference uncertainty, harsher assumptions on the richness of the economy have to be made in order for decentralized markets to generate stable outcomes in equilibrium.

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