Strategy-Proofness for Hospitals in Matching Markets

Strategy-proof implementation is one of the many elements that have contributed to the successful application of matching theory in real life. However, in many-to-one matching markets without transfers (e.g., doctors to hospitals with fixed salaries) there is no stable mechanism which is strategy-proof for hospitals. Furthermore, strategy-proofness and stability cannot be achieved for both hospitals and doctors simultaneously even in one-to-one matching markets. This paper shows that in many-to-one matching markets with transfers it is possible to guarantee stability and strategy-proofness-for-hospitals whenever an opportunity cost condition is satisfied. In addition, it is shown that stability and strategy-proofness are possible for both hospitals and doctors simultaneously . Finally, it is shown that strategy-proofness can be achieved in the interior of the core. JEL classification: C62; C71; C78; D47.