Scandinavian Working Papers in Economics
Working Papers,
Lund University, Department of Economics
No 2013:27: Assignment Games with Externalities
Jens Gudmundsson () and Helga Habis ()
Additional contact information
Jens Gudmundsson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Helga Habis: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Abstract: We introduce externalities into a two-sided, one-to-one assignment game by letting the values generated by pairs depend on the behavior of the other agents. Extending the notion of blocking to this setup is not straightforward; a pair has to take into account the possible reaction of the residual agents to be able to assess the value it could achieve. We define blocking in a rather general way that allows for many behavioral considerations or beliefs. The main result of the paper is that a stable outcome in an assignment game with externalities always exists if and only if all pairs are pessimistic regarding the others' reaction following a deviation. The relationship of stability and optimality is also discussed, as is the structure of the set of stable outcomes.
Keywords: Two-sided matching; assignment game; externalities; stability
19 pages, August 27, 2013
Full text files
WP13_27.pdf
Questions (including download problems) about the papers in this series should be directed to Iker Arregui Alegria ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:lunewp:2013_027This page generated on 2024-09-13 22:16:10.