For the Student: Matching and Economic Design

Authors

  • Georgy Artemov,

  • Sven Feldmann,

  • Simon Loertscher

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    • Artemov and Loertscher: Department of Economics, The University of Melbourne, Victoria 3010 Australia; Feldmann: Melbourne Business School, The University of Melbourne, Victoria 3053 Australia. Corresponding author: Artemov, email <gartemov@unimelb.edu.au>.


Abstract

This article presents a brief survey of two-sided matching. We introduce the reader to the problem of two-sided matching in the context of the college admission model and explain two central requirements for a matching mechanism: stability and non-manipulability. We show how the frequently used ‘Boston Mechanism’ fails these key requirements and describe how an alternative, the Deferred Acceptance Algorithm, leads to stable matchings but fails to be non-manipulable in general. A third mechanism, the Top Trading Cycle, is efficient and non-manipulable when only one side of the match acts strategically. We also discuss some applications of matching theory.

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