Expectational Equilibria in Many-to-one Matching Models with Contracts - A Reformulation of Competitive Equilibrium

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Abstract

We introduce the notion of expectational equilibrium in a very general specification of the many-to-one matching with contracts model. The endogenous variables in an expectational equilibrium are expectations about tradable contracts. Expectational equilibrium outcomes are equivalent to stable outcomes. Substitutability of preferences is a sufficient condition for existence. Expectational equilibrium unifies all the other approaches used in the literature so far, in particular Walrasian equilibrium, Drèze equilibrium, and market clearing cutoffs. It also applies to cases where contracts do not involve money as well as cases where there is a smallest monetary unit of account.
Original languageEnglish
PublisherMaastricht University, Graduate School of Business and Economics
Number of pages43
DOIs
Publication statusPublished - 2 Jul 2020

Publication series

SeriesGSBE Research Memoranda
Number018
ISSN2666-8807

JEL classifications

  • c71 - Cooperative Games
  • c78 - "Bargaining Theory; Matching Theory"
  • d45 - "Rationing; Licensing"
  • d51 - Exchange and Production Economies

Keywords

  • Matching
  • Competitive equilibrium
  • Stable outcomes
  • Expectational Equilibrium

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