Decentralized Matching with Aligned Preferences
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.
We are grateful to Attila Ambrus, Federico Echenique, Guillaume Haeringer, Fuhito Kojima, and Al Roth for many useful conversations and suggestions. This work is supported by NSF and the Sloan Foundation. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.