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Stability of marriage with externalities

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Abstract

In many matching problems, it is natural to consider that agents may have preferences not only over the set of potential partners but also over what other matches occur. Once such externalities are considered, the set of stable matchings will depend on what agents believe will happen if they deviate. In this paper, we introduce endogenously generated beliefs (which depend on the preferences). We introduce a particular notion of endogenous beliefs, called sophisticated expectations, and show that with these beliefs, stable matchings always exist.

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Authors and Affiliations

  1. Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA, 15213, USA

    Isa E. Hafalir

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  1. Isa E. Hafalir
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Correspondence to Isa E. Hafalir.

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I would like to thank the editor, William Thomson, two anonymous referees, Kalyan Chatterjee, Federico Echenique, Matthew Jackson, Tarık Kara, Semih Koray, and Manabu Toda for their comments and suggestions. I am very much indebted to Vijay Krishna for his guidance and support.

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Hafalir, I.E. Stability of marriage with externalities. Int J Game Theory 37, 353–369 (2008). https://doi.org/10.1007/s00182-008-0122-9

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  • DOI: https://doi.org/10.1007/s00182-008-0122-9

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