Working Paper: NBER ID: w18168
Authors: jeremy t fox; david h hsu; chenyu yang
Abstract: Agents in two-sided matching games vary in characteristics that are unobservable in typical data on matching markets. We investigate the identification of the distribution of unobserved characteristics using data on who matches with whom. In full generality, we consider many-to-many matching and matching with trades. The distribution of match-specific unobservables cannot be fully recovered without information on unmatched agents, but the distribution of a combination of unobservables, which we call unobserved complementarities, can be identified. Using data on unmatched agents restores identification. We estimate the contribution of observables and unobservable complementarities to match production in venture capital investments in biotechnology and medical firms.
Keywords: matching games; venture capital; unobserved heterogeneity
JEL Codes: C35; C78; J12; L0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| data on sorting patterns (Y10) | distributions of unobserved agent characteristics (D39) |
| unobserved complementarities (D10) | computation of assignment probabilities (C78) |
| data on unmatched agents (L85) | distribution of match-specific unobservables (C78) |
| joint distributions of matches (C46) | distribution of unobserved complementarities (D39) |