The literature on school choice assumes that families can submit a preference list over all the schools they want to be assigned to. However, in many real-life instances families are only allowed to submit a list containing a limited number of schools. Subjects’ incentives are drastically affected, as more individuals manipulate their preferentes. Including a safety school in the constrained li...

In auctions where a seller can post a reserve price but if the object fails to sell cannot commit never to attempt to resell it, revenue equivalence between repeated first price and second price auctions without commitment results. When the time between auctions goes to zero, seller expected revenues converge to those of a static auction with no reserve price. With many bidders, the seller equi...

This paper analyzes the role played by intermediation in a decentralized market, where trade is carried out through bilateral bargaining, and where the bargaining outcomes depend on the process of search for suitable trading partners. To this purpose, ...rst a model of random matching and twosided search with heterogeneous agents is developed. The characterization of pure search equilibria is p...

This paper studies a search model of two-sided matching with terms of trade. In a market reside heterogenous sellers and buyers. Agents search for trading partners and meet bilaterally in a random fashion. The question of who trades with whom, besides the terms of trade, must be answered. We seek decentralized market equilibrium with search frictions. We show that the set of equilibria has a la...

Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options We experimentally investigate multiple notions of equity in ultimatum bargaining with asymmetric outside options. Building on the generalized equity principle formulated by Selten (1978), we derive three different equity rules that can explain 43% of all offers. Our withinsubject design further allows us to show that...

We consider one-to-one matching (roommate) problems in which agents (students) can either be matched as pairs or remain single. The aim of this paper is twofold. First, we review a key result for roommate problems (the “lonely wolf” theorem) for which we provide a concise and elementary proof. Second, and related to the title of this paper, we show how the often incompatible concepts of stabili...

It is well known that the widely-used Boston mechanism for allocating students to schools is not strategy-proof. An observation shows that relaxing the solution concept to dominance solvability could allow the Boston mechanism to achieve a desirable outcome. I define the acyclic priority structure of schools and find that the Boston mechanism is dominancesolvable if and only if the priority str...

Couples looking for jobs in the same labor market may cause instabilities. We determine a natural preference domain, the domain of weakly responsive preferences, that guarantees stability. Under a restricted unemployment aversion condition we show that this domain is maximal for the existence of stable matchings. We illustrate how small deviations from (weak) responsiveness, that model the wish...

We show that to each linear solution that has the inessential game property, there is an inner product on the space of games such that the solution to each game is the best additive approximation of the game (w.r.t. the norm derived from this inner product). If the space of games has an inner product, then the function that to each game assigns the best additive approximation of this game (w.r....

We study dynamic bargaining with asymmetric information and interdependent values. We base our analysis on the equilibria characterized by Deneckere and Liang (2006) for the gap case. We show that as the gap between the cost and value of the weakest type shrinks to zero, the continuous time limit of equilibria changes dramatically from rare bursts of trade with long periods of inactivity to smo...