Theoretical Economics, Volume 17, Number 2 ( 2022)

Theoretical Economics 17 (2022), 687–724


Dynamically stable matching

Laura Doval

Abstract


I introduce a stability notion, dynamic stability, for two-sided dynamic matching markets where (i) matching opportunities arrive over time, (ii) matching is one-to-one, and (iii) matching is irreversible. The definition addresses two conceptual issues. First, since not all agents are available to match at the same time, one must establish which agents are allowed to form blocking pairs. Second, dynamic matching markets exhibit a form of externality that is not present in static markets: an agent’s payoff from remaining unmatched cannot be defined independently of what other contemporaneous agents’ outcomes are. Dynamically stable matchings always exist. Dynamic stability is a necessary condition to ensure timely participation in the economy by ensuring that agents do not strategically delay the time at which they are available to match.

Keywords: Dynamic stability, dynamic matching, stable matching, non-transferable utility, externalities, credibility, market design, dynamic arrivals, aftermarkets

JEL classification: D47, C78

Full Text:  PRINT  VIEW