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Stable Belief and Stable Matching

Montreal Microeconomic Theory Seminar 2017-2018
joint with the departments of economics of the universities of Montréal, Concordia and McGill as well as CIRANO

room H-1145 (Concordia University, 1455 de Maisonneuve Blvd West, 11th floor)

Organizer : Ming Li (Concordia U.)



We study matching problems with transferable utility in the presence of adverse selection, and define a notion of stability, i.e., immunity to individual and pairwise deviations, as the consistency of publicly observable matching outcomes and uninformed agents’ beliefs over informed agents’ private types. The definition incorporates both “off-stability beliefs” conditional on the blocking of deviating pairs, and “stable beliefs” in the absence of such deviations. We define a notion of Bayesian efficiency of matching outcomes relative to endogenous stable beliefs, and investigate robust efficiency properties that stable beliefs and stable matchings must jointly satisfy.

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