Economics of Matching: The Marriage Problem

Introduction Many economic problems concern the need to match members of one group of agents with one or more members of a second group of agents. For example, workers need to be matched with firms, graduate students with graduate schools, authors with academic journals, landlords with tenants, and men with women, to name just a few. Matching problems pose three central issues: ffl Is there a stable matching---one that cannot be upset by individual negotiations? ffl What procedures or institutions accomplish stable matchings? ffl Are these procedures manipulable? This section gives a brief introduction to the economics of two--sided matching. 1 To keep matters as simple as possible, we focus on one particular class of matching problems: the matching of two distinct groups, say W := fw 1 ; \Delta \