Disclosure of information in matching markets with non-transferable utility |
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| Affiliation: | 1. Dipartimento di Economia “Marco Biagi”, Università degli Studi di Modena e Reggio Emilia, Viale Berengario 51, 43 ovest, 41121 Modena, Italy;2. Dipartimento di Economia e Management, Università degli Studi di Pisa, Via Cosimo Ridolfi 10, 56124 Pisa, Italy;1. Orthopedist, Department of Repair and Reconstruction Surgery, Affiliated Sixth People''s Hospital of Shanghai Jiaotong University, Shanghai, China;2. Professor, Department of Repair and Reconstruction Surgery, Affiliated Sixth People''s Hospital of Shanghai Jiaotong University, Shanghai, China;1. School of Economics, University of East Anglia, Earlham Road, Norwich NR4 7TJ, UK;2. Centre for Behavioural and Experimental Social Science, University of East Anglia, Earlham Road, Norwich NR4 7TJ, UK;3. Centre for Competition Policy, University of East Anglia, Earlham Road, Norwich NR4 7TJ, UK;1. Research Division, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, MO 63166-0442, United States;2. University of Pennsylvania, 3718 Locust Walk, Philadelphia, PA 19104, United States;3. UCLA Anderson School of Management, 110 Westwood Plaza, Los Angeles, CA 90095, United States;1. Centro de Pesquisas em Sensoriamento Remoto e Meteorologia (CEPSRM), Universidade Federal do Rio Grande do Sul (UFRGS), Porto Alegre, Rio Grande do Sul, Brazil;2. Instituto de Pesquisas Hidráulicas (IPH), Universidade Federal do Rio Grande do Sul (UFRGS), Porto Alegre, Rio Grande do Sul, Brazil |
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| Abstract: | We present a model of two-sided matching where utility is non-transferable and information about individualsʼ skills is private, utilities are strictly increasing in the partnerʼs skill and satisfy increasing differences. Skills can be either revealed or kept hidden, but while agents on one side have verifiable skills, agents on the other side have skills that are unverifiable unless certified, and certification is costly. Agents who have revealed their skill enter a standard matching market, while others are matched randomly. We find that in equilibrium only agents with skills above a cutoff reveal, and then they match assortatively. We show that an equilibrium always exists, and we discuss multiplicity. Increasing differences play an important role to shape equilibria, and we remark that this is unusual in matching models with non-transferable utility. We close the paper with some comparative statics exercises where we show the existence of non-trivial externalities and welfare implications. |
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| Keywords: | Costly disclosure of information Matching markets Non-transferable utility Partial unraveling Positive assortative matching Increasing differences |
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