Review of Economic Studies Vol. 91 No. 6 2024
Stability in Large Markets
Abstract
In matching models, pairwise-stable outcomes do not generally exist without substantial restrictions on both preferences and the topology of the network of contracts. We address the foundations of matching markets by developing a matching model with a continuum of agents that allows for arbitrary preferences and network structures. We show that pairwise-stable outcomes are guaranteed to exist. When agents can interact with multiple other counterparties, pairwise stability is too weak of a solution concept, and we argue that a refinement of it called tree stability is the most appropriate solution concept in this setting. Our main results show that tree-stable outcomes exist for arbitrary preferences and network topologies.
- DOI
- 10.1093/restud/rdae008
- Volume
- 91
- Issue
- 6
- Pages
- 3532-3568
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref