Two-Sided Matching with Interdependent Values

Two-Sided Matching with Interdependent Values

By
Michael Ostrovsky, Archishman Chakraborty, Alessandro Citanna
Journal of Economic Theory. January
2010, Vol. 145, Issue 1, Pages 85-105

We introduce and study two-sided matching with incomplete information and interdependent valuations on one side of the market. An example of such a setting is a matching market between colleges and students in which colleges receive partially informative signals about students. Stability in such markets depends on the amount of information about matchings available to colleges. When colleges observe the entire matching, a stable matching mechanism does not generally exist. When colleges observe only their own matches, a stable mechanism exists if students have identical preferences over colleges, but may not exist if students have different preferences.