On the observational equivalence of random matching

Random matching is often used in economic models as a means of introducing uncertainty in sequential decision problems. We show that random matching processes that satisfy standard proportionality laws are not unique. We give conditions on the payo¤s and transitions functions of sequential decision models that insure that the models are robust to the non-uniqueness of the matching process. Under these conditions, the information contained in the proportionality laws is all is needed to know about the matching process to formulate the model. Keywords and Phrases: random matching, aggregate uncertainty, observational equivalence JEL Classi…cation Numbers: C00, C73, C78, D83