Journal Article

Screening in a Matching Market

Roman Inderst

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 68, issue 4, pages 849-868
Published in print October 2001 | ISSN: 0034-6527
Published online October 2001 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00192
Screening in a Matching Market

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Contract design under incomplete information is often analysed in a bilaterally monopolistic setting. If the informed party's reservation value does not depend on its private information (its type), it is a standard result that the uninformed side offers “low” types distorted contracts to reduce the information rent left to “high” types.

We challenge this result by embedding contract design in a matching market environment. We consider a market where players meet pairwise and where, in each match, either side may be chosen to make a take-it-or-leave-it offer. As frictions become sufficiently low, we find that the set of equilibria is independent of whether there is complete or incomplete information. In particular, all contracts are free of distortions.

Journal Article.  0 words. 

Subjects: Economics

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