Random decentralized market processes for stable job matchings with competitive salaries

Abstract

We analyze a decentralized process in a basic labor market where finitely many heterogeneous firms and workers meet directly and randomly in pursuit of higher payoffs over time and agents may behave myopically. We find a general random decentralized market process that almost surely converges in finite time to a competitive equilibrium of the market. A key proposition en route to this result exhibits a finite sequence of successive bilateral trades from an arbitrary initial market state to a stable matching between firms and workers with a scheme of competitive salary offers.

BLMA: A Blind Matching Algorithm With Application to Cognitive Radio Networks

“…Furthermore, balancedness provides a generalization of the Nash bargaining solution to exchange networks. 13 This market sentiment random variable is where the dynamic in [10] departs from the original work in [8]. However, the author in [10] shows this exogenous random variable is needed to establish polynomial time convergence.…”

“…Firms and workers match, break up, and re-match in search for better opportunities. The behavior of agents fluctuates according to a random variable called market sentiment 13 . Given some further assumption on the match values (or the weights of edges), the author proves polynomial time convergence occurs in this linear model.…”

A one-shot deviation principle for stability in matching problems

“…Another related literature is the literature on convergence to the core in cooperative games with transferable utility (Agastya, 1997;Feldman, 1974;Green, 1974;Newton, 2012). A branch of this literature has recently explicitly focused on the case in which all relevant coalitions are pairs -the transferable utility equivalent of the marriage problem, otherwise known as the assignment problem (Biró, Bomhoff, Golovach, Kern and Paulusma, 2012;Chen, Fujishige and Yang, 2012;Nax and Pradelski, 2013;Shapley and Shubik, 1971). Of particular note is the work of Nax and Pradelski (2013), who adapt the results of the current paper to obtain selection within the core of the assignment game.…”

An Approximate Law of One Price in Random Assignment Games

“…A (non-comprehensive) list of further work on assignment games includes the study of strategic incentives Demange and Gale (1985), entry Mo (1988), convergence via decentralized processes Chen et al (2012); Klaus and Payot (2012); Nax et al (2013), elongation of the core Quint (1987) and its dimensions Núñez and Rafels (2008), and median stable matchings Schwarz and Yenmez (2011).…”