Theoretical Economics

Journal of the Econometric Society

Edited by: Federico Echenique • ISSN (e): 1555-7561 • ISSN (print): 1933-6837

Theoretical Economics: Jan, 2018, Volume 13, Issue 1

Payoff equivalence of efficient mechanisms in large matching markets

https://doi.org/10.3982/TE2793
p. 239-272

Yeon-Koo Che, Olivier Tercieux

We study Pareto efficient mechanisms in matching markets when the number of agents is large and individual preferences are randomly drawn from a class of distributions, allowing for both common and idiosyncratic shocks. We provide a broad set of circumstances under which, as the market grows large, all Pareto efficient mechanisms---including top trading cycles (with an arbitrary ownership structure), serial dictatorship (with an arbitrary serial order), and their randomized variants---produce a distribution of agent utilities that in the limit coincides with the utilitarian upper bound. This implies that Pareto efficient mechanisms are uniformly asymptotically payoff equivalent ``up to the renaming of agents.'' Hence, when the conditions of our model are met, policy makers need not discriminate among Pareto efficient mechanisms based on the aggregate payoff distribution of participants.


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