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Title: Matching with Trade-offs: Revealed Preferences over Competing Characteristics

Author(s): Alfred Galichon and Bernard Salanié

Publication Date: June 2010

Keyword(s): assignment, marriage and matching

Programme Area(s): Industrial Organization and Labour Economics

Abstract: We investigate in this paper the theory and econometrics of optimal matchings with competing criteria. The surplus from a marriage match, for instance, may depend both on the incomes and on the educations of the partners, as well as on characteristics that the analyst does not observe. The social optimum must therefore trade off matching on incomes and matching on educations. Given a flexible specification of the surplus function, we characterize under mild assumptions the properties of the set of feasible matchings and of the socially optimal matching. Then we show how data on the covariation of the types of the partners in observed matches can be used to estimate the parameters that define social preferences over matches. We provide both nonparametric and parametric procedures that are very easy to use in applications.

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Bibliographic Reference

Galichon, A and Salanié, B. 2010. 'Matching with Trade-offs: Revealed Preferences over Competing Characteristics'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7858