Matching with Multilateral Contracts
By Marzena J. Rostek (University of Wisconsin) & Nathan Yoder (University of Georgia)
Abstract: The matching literature has focused on bilateral agreements. In this paper, we examine stability in environments where groups of agents interact. We do so by extending the matching with contracts (Hatfield and Milgrom (2005)) framework to allow for agreements among more than two agents and those which have externalities. In so doing, we offer a framework unifying the matching, network formation, and coalition formation literatures. In both transferable and nontransferable utility environments, we give results on existence, uniqueness, and efficiency of stable outcomes in environments with substitutes and those with complements. We also provide comparative statics results, showing how stable outcomes change when agreements are bundled together.
Full Article: Social Science Research Network