Friday, April 16, 2010

Matching with preferences for colleagues

Marek Pycia at UCLA has a revised paper on matching when you care who your colleagues are:
Stability and Preference Alignment in Matching and Coalition Formation

Abstract: In any state of nature, agents have preference rankings over coalitions they belong to. Given a state of nature, agents’ preferences are pairwise aligned if any two agents in the intersection of any two coalitions prefer the same one of the two coalitions. Our main result says that under mild regularity conditions there exists a core stable coalition structure in every state of nature if, and only if, the preferences are pairwise-aligned in every state of nature. Pairwise alignment is satisfied by some standard models of payoff determination such as Nash bargaining that were not previously recognized as related to stability. As applications, we study complementarities and peer effects in many-to-one matching, the assortative structure of coalitions, and the impact of inequality among agents on coalition formation.

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