Template-Type: ReDIF-Paper 1.0
Author-Name: Burkhard C. Schipper
Author-Name-First: Burkhard C.
Author-Name-Last: Schipper
Author-Name: Tina Danting Zhang
Author-Name-First: Tina Danting
Author-Name-Last: Zhang
Author-Workplace-Name: Department of Economics, University of California Davis
Title: Matching, Unanticipated Experiences, Divorce, Flirting, Rematching, Etc.
Abstract: We study dynamic decentralized two-sided matching where players' preferences evolve due to unanticipated experiences. Stability requires no pairwise common belief in blocking, but unanticipated experiences can destabilize matchings. We show the existence of self-confirming outcomes that are stable and do not lead to unanticipated experiences. We propose a decentralized matching process that prioritizes mutual optimal blocking pairs with probability 1 - epsilon and picks any other optimal blocking pair with epsilon, representing market frictions. For convergence to self-confirming stable outcomes in every matching market, frictions are necessary even without unawareness. We extend our results by allowing communication and show convergence to flirt-proof self-confirming outcomes.
Length: 41
File-URL: https://repec.dss.ucdavis.edu/files/c1phkrwvckbgch2atfook3t7d0w8/unawmatching23.pdf
File-Format: application/pdf
Number: 371
Classification-JEL: D83, C70
KeyWords: decentralized matching, unawareness, transformative experiences, endogenous preferences, disclosure
Creation-Date: 20250401
Handle: RePEc:cda:wpaper:371