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Disclosure of information in matching markets with non-transferable utility

Bilancini, Ennio and Boncinelli, Leonardo Disclosure of information in matching markets with non-transferable utility. Games and economic behavior, 82. pp. 143-156. ISSN 0899-8256 (2013)

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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.

Item Type: Article
Identification Number: 10.1016/j.geb.2013.07.003
Uncontrolled Keywords: Costly disclosure of information; Matching markets; Non-transferable utility; Partial unraveling; Positive assortative matching; Increasing differences
Subjects: H Social Sciences > HB Economic Theory
Research Area: Economics and Institutional Change
Depositing User: Caterina Tangheroni
Date Deposited: 24 Jan 2018 11:08
Last Modified: 24 Jan 2018 11:08
URI: http://eprints.imtlucca.it/id/eprint/3876

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