Working Paper: NBER ID: w14840
Authors: Muriel Niederle; Leeat Yariv
Abstract: 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.
Keywords: No keywords provided
JEL Codes: C78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firms' directed offers to workers (J29) | stable matches (C62) |
| Market frictions (G19) | additional assumptions required for stability (C62) |
| Aligned preferences (Y80) | uniqueness of stable matches (C78) |
| Complete information (Y20) | stable match (C62) |
| Aligned preferences (Y80) | likelihood of stable matches (C78) |
| Rich economy (P19) | unique stable match through Bayesian Nash equilibrium (C78) |