Stable matching theory

Short description: Field of market economics

This article includes a list of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (December 2020) (Learn how and when to remove this template message)

|

Part of a series on

Economics

* Index
* Outline
* Category

* History
* Branches
* Classification

* History of economics
* Schools of economics

* Mainstream economics
* Heterodox economics
* Economic methodology

* Economic theory
* Political economy

* Microeconomics
* Macroeconomics

* International economics

* Applied economics

* Mathematical economics
* Econometrics

* JEL classification codes

* Concepts
* Theory
* Techniques

* Economic systems
* Economic growth
* Market
* National accounting
* Experimental economics
* Computational economics

* Game theory
* Operations research

By application

* Agricultural
* Behavioral
* Business
* Cultural
* Demographic
* Development
* Digitization
* Ecological
* Education
* Engineering
* Environmental
* Evolutionary
* Expeditionary
* Economic geography
* Financial
* Health
* Economic history
* Industrial organization
* Information
* Institutional
* Knowledge
* Labour
* Law
* Managerial
* Monetary
* Natural resource
* Organizational
* Personnel
* Economic planning
* Economic policy
* Public economics
* Public / Social choice
* Regional
* Rural
* Service
* Socioeconomics
* Economic sociology
* Economic statistics
* Urban
* Welfare
* Welfare economics

Notable economists

* François Quesnay
* Adam Smith
* David Ricardo
* Thomas Robert Malthus
* John Stuart Mill
* Karl Marx
* William Stanley Jevons
* Léon Walras
* Alfred Marshall
* Irving Fisher
* John Maynard Keynes
* Arthur Cecil Pigou
* John Hicks
* Wassily Leontief
* Paul Samuelson
* more

Lists

* Economists
* Publications (journals)

Glossary

* Glossary of economics

*   *

* v
* t
* e

In economics, stable matching theory or simply matching theory, is the study of matching markets. Matching markets are distinguished from Walrasian markets in the focus of who matches with whom. Matching theory typically examines matching in the absence of search frictions, differentiating it from search and matching theory. In 2012, the Nobel Memorial Prize in Economic Sciences was awarded to Alvin E. Roth and Lloyd Shapley for their work on matching theory.[1]

## Contents

* 1 Overview
* 2 Applications
* 3 Relationship with search and matching theory
* 4 See also
* 5 References

## Overview

Matching has two main categories. One category is matching with nontransferrable utility (NTU), where match payoffs are nontransferable and stability requires individual rationality and double coincidence of wants. This strand of the literature emerged from the Gale and Shapley (1962) introduction of the stable marriage problem. The second category is matching with transferable utility (TU). The latter dates back to work on Monge (1781) and Kantorovich (1942) work on optimal transportation theory, in particular following Koopmans and Beckmann (1957) who studies the problem with pricing. Modern TU matching follows work by Shapley and Shubik (1971), who provided a TU equivalent of Gale and Shapley (1962), as well as Becker (1973) who applied TU matching to the marriage market.[2]

Matching theory typically focuses on two-sided matching, where two types of workers are considered (e.g. men and women in the marriage market, firms and workers in the labor market, and students matching with colleges). A smaller literature considers other types of matching, such as one-sided matching (e.g. the stable roommates problem) and many-sided matching (e.g. man-woman-child matching). Within two sided matching, three types of matches are considered: one-to-one, many-to-one, and many-to-many.[3]

Matching theory has been applied to study positive questions, such as who matches with who, as well as normative questions regarding how to best design matching markets.

## Applications

Matching theory has been applied to study a wide set of applications, including: marriage, housing allocation, kidney exchange, the National Resident Matching Program, school choice,[4] and hedging strategies in options financial markets.[5]

## Relationship with search and matching theory

Matching theory typically examines matching in the absence of search frictions in a centralized environment, differentiating it from search and matching theory. Under certain contexts, the search and matching equilibrium converges to a stable matching when search frictions disappear[6]

## See also

* Matching theory (economics)

## References

1. ↑ "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2012". https://www.nobelprize.org/prizes/economic-sciences/2012/summary/.
2. ↑ Chade, Hector; Eeckhout, Jane; Smith, Lones (2017). "Sorting through Search and Matching Models in Economics". Journal of Economic Literature 55: 493–544. http://www.janeeckhout.com/wp-content/uploads/20.pdf.
3. ↑ Niederle, Muriel; Roth, Alvin; Sönmez, Tayfun (2007). The New Palgrave Dictionary of Economics, 2nd edition. Palgrave Macmillan. https://web.stanford.edu/~niederle/Palgrave Matching.Approved.pdf.
4. ↑ Levin, Jonathan (2011). "Matching Theory and Its Applications". https://piazza.com/class_profile/get_resource/h7c8a0q5bh717w/h7gxc4dztaz7k3.
5. ↑ Wang, Q.-W.; Shu, Jian-Jun (February 2017). "Financial option insurance". Risk Management–Journal of Risk Crisis and Disaster 19 (1): 72–101. doi:10.1057/s41283-016-0013-5.
6. ↑ Lauermann, Stephan; Nöldeke, Georg (2014). "Stable marriages and search frictions". Journal of Economic Theory 151: 163–95. https://ideas.repec.org/a/eee/jetheo/v151y2014icp163-195.html.

0.00

(0 votes)

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Stable_matching_theory&oldid=4379246"
*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template