Working Papers, Department of Economics, Lund University
Compromises and Rewards: Stable and Non-manipulable Probabilistic Pairing
Abstract: Can we reconcile stability with non-manipulability in
pairing problems by selecting lotteries over matchings?We examine the
problem of eliciting preferences to make pairs as introduced by Gale and
Shapley (1962). We develop ex-ante notions of stability and
non-manipulability that are parameterized by collections of utility
functions. In particular, we study the collection of utility functions with
increasing differences for which stability and non-manipulability turn out
to characterize Compromises and Rewards. This is a novel rule that is
fundamentally different from the one that has attracted most attention in
the literature, Deferred Acceptance.
Keywords: Pairing; Lottery; Stability; Non-manipulability; Compromises; Rewards; (follow links to similar papers)
JEL-Codes: C62; D02; D60; (follow links to similar papers)
27 pages, October 26, 2015
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