Flanders, S. (February 2018). The Cost of Tradition: Matching with Single-Peaked Preferences.
Sam Flanders | ASB Faculty | Research Paper
This paper studies two-sided one-to-one matching in a frictionless nontransferable utility model where agents are characterized by a univariate type and have single-peaked preferences characterized by an ideal type (decoupled from own type) and greater preference for matches closer to that type. Given some modest distributional assumptions, we recover a closed form for the matching function, and we prove the assignment is unique in finite markets. We also develop a generalization of the Sequential Preference Condition of Eeckhout (2000) for uniqueness and show it applies to our model. Finally, we apply our results to a simple model of pre-market educational investments and marriage matching. In our simple setting, vertical preferences and symmetric ability distributions induce efficient investments, as in Bhaskar and Hopkin (2016). However, using the above results to add “traditional” men, who prefer partners below their own education level, effectively shifts the distribution of men down, breaking symmetry and causing women and non-traditional men to make inefficient investments. Many traditional men themselves, by contrast, make efficient investments as they are insulated from these distributional pressures by being in a form of scarcity that arises under single-peaked preferences.