Incentives in Two-Sided Matching with Random Stable Mechanisms.

This paper considers the incentives confronting agents who face the prospect of being matched by some sort of random stable mechanism, such as that discussed in Roth and Vande Vate (1990). A one period game is studied in which all stable matchings can be achieved as equilibria; in a natural class of undominated strategies, and in which certain unstable matchings can also arise in this way. A multi-period extension of this game is then considered in which subgame perfect equilibria must result in stable matches. These results suggest avenues to explore markets in which matching is organized in a decentralized way.