Strategic Disaggregation in Matching Markets
Decisions agents make before and after matching can be strategically linked through the match. We demonstrate this linkage by introducing a game in which universities can force students to commit to majors before matriculating or allow students to pick their majors during their studies. The interaction between “matching forces” (competition for higher quality partners) and “principal-agent forces” (moral hazard and adverse selection) leads to two different equilibria mirroring the admissions systems in the US and England.With monetary transfers, our model provides new insight into athletic scholarships. Price competition removes the surplus from enrolling top student athletes, making it impossible to sustain the US equilibrium with competitive wages. We show that a properly designed transfer cap that places additional restrictions on the way universities can pay their athletes achieves the rst-best welfare outcome, and can lead to a Pareto improvement over the status quo.
Date:
14 June 2018, 13:00 (Thursday, 8th week, Trinity 2018)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room C
Speaker:
Stephen Nei (University of Oxford)
Organising department:
Department of Economics
Organisers:
Anne Pouliquen (University of Oxford),
Erin Saunders (University of Oxford)
Part of:
Department of Economics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editors:
Erin Saunders,
Anne Pouliquen,
Melis Clark
