Essays on the Applications of Matching Theory to Political Economy


Book Description

In this dissertation I use tools from market design and matching theory to study institutional design in political economy and development. How are personnel allocated within a public organization? What is the intended distribution of talent across institutions and are organizational procedures successful in attaining their stated goals? Who can exert influence in personnel allocation processes and what is the impact of these organizational choices on outcomes? How does an institution evolve? How should these systems be designed? My research tries to address such institutional questions at the heart of public administration and political economy. Matching theory in political economy is an unexplored space. In political economy, we often think of underlying voting processes determining allocations or outcomes. However, there are also many assignment problems where there is no voting, or where the voting process is embedded within a larger allocation procedure. At the heart of such assignment procedures is a matching mechanism. It takes as input, people's preferences of where they want to be assigned, incorporates priorities and other constraints to be instituted, and returns the set of assignments. I use and develop tools of matching theory in these instances to better understand the assignment problems (empirically and theoretically) and to design better mechanisms (an engineering perspective). I explore two new substantive applications in matching theory: mechanisms allocating elite civil servants to states in India (Chapter 1) and party-specific mechanisms for assigning politicians to committees in the US Senate (Chapter 2). These political economy applications share a unique feature that is new to the theoretical matching literature. Namely, the very people who are allocated by the matching mechanism choose, or agree upon, the choice of the matching mechanism. Chapter 3 studies the matching mechanism as an endogenously chosen institution and introduces the novel concept of majority stability. Collectively, my dissertation highlights two important themes at the intersection of matching theory and political economy: i) correlated preferences as a source of institutional imbalance and ii) the perspective of a matching mechanism being an endogenous institutional choice.




Essays on Matchig Theory


Book Description

This dissertation consists of four essays on matching theory. The first two essays, which are presented in Chapters 2 & 3, investigate two different manipulation channels in school choice problems. The last two essays, which are presented in Chapters 5 & 6, employ the hospital-intern matching market model. While I introduce and investigate a new manipulation tool in Chapter 5, the last essay studies the welfare effects of pre-arrangements.




Essays in Matching Theory


Book Description

"In two-sided matching problems, there are two disjoint sets of agents, for instance, firms and workers, hospitals and interns. Each agent has a preference order over agents on the other side. An outcome of the problem is a match. Stability has been considered to be the main property that accounts for the success of many matching processes. It is a robustness property: no coalition has a good reason to disrupt the suggested match. A well-studied question is to what extent it is reasonable for agents to be truthful about their preferences. Agents may have an incentive to misrepresent their preferences. Therefore, procedures that produce stable matches with respect to the announced preferences may not produce stable matches with respect to the true preferences. Then, a natural question to ask is: What are Nash equilibria? A significant portion of this volume is devoted to full-fledged game theoretic analysis in one-to-one, many-to-one and many-to-many matching problems. In the first chapter, we study the problem of allocating indivisible goods to agents when monetary transfers are not allowed. Our main requirement is strategy-proofness. Our second goal is fairness. Fairness is incompatible with efficiency. We consider two instances of this problem: (1) the supply of each object is one; and (2) the supply of each object may be greater than one. For each instance, we identify a fair and strategy-proof rule that Pareto dominates any other rule satisfying the two properties. In the second chapter, we consider many-to-one and many-to-many matching problems where each agent has substitutable and separable preferences. We analyze the stochastic dominance (sd) Nash equilibria of the game induced by any vii probabilistic stable matching rule. In the third chapter, we model decentralized matching as a sequential game in which firms sequentially make job offers to workers. The complex and uncertain aspects of decentralized processes are represented by a randomly selected order according to which firms make offers. We study the sd-Nash and realization independent equilibria of the Decentralized Game we define. In the fourth chapter, we show that the so-called 'rural hospital theorem' generalizes to many-to-many matching problems where agents on both sides of the problem have substitutable and weakly separable preferences. We also show that this domain of preferences is maximal"--Page vi-vii.




Matching Theory


Book Description

This book surveys matching theory, with an emphasis on connections with other areas of mathematics and on the role matching theory has played, and continues to play, in the development of some of these areas. Besides basic results on the existence of matchings and on the matching structure of graphs, the impact of matching theory is discussed by providing crucial special cases and nontrivial examples on matroid theory, algorithms, and polyhedral combinatorics. The new Appendix outlines how the theory and applications of matching theory have continued to develop since the book was first published in 1986, by launching (among other things) the Markov Chain Monte Carlo method.




Essays in Empirical Matching


Book Description

This thesis combines three essays on empirical applications and methods in two-sided matching markets. The first essay uses existing methods to estimate preferences for schools using rank order lists from New York City's new high school assignment system launched in Fall 2003 to study the consequences of coordinating school admissions in a mechanism based on the student-proposing deferred acceptance algorithm. The second essay develops techniques for estimating preferences in two-sided matching markets with non-transferable utility using only data on final matches. It uses these techniques to estimate preferences in the market for family medicine residents. These estimates are then used to analyze two economic questions. First, it investigates whether centralization in the market for medical residents is primarily responsible for low salaries paid to medical residents. Second, it analyzes the effects of government interventions intended to encourage training of medical residents in rural areas. The final essay studies estimation and non-parametric identfication of preferences in two-sided matching markets with non-transferable utility. It studies the special case in which preferences of each side of the market is vertical and data from a pairwise stable match, in a single large market is observed.




Discrete Mathematics with Applications


Book Description

This approachable text studies discrete objects and the relationsips that bind them. It helps students understand and apply the power of discrete math to digital computer systems and other modern applications. It provides excellent preparation for courses in linear algebra, number theory, and modern/abstract algebra and for computer science courses in data structures, algorithms, programming languages, compilers, databases, and computation. * Covers all recommended topics in a self-contained, comprehensive, and understandable format for students and new professionals * Emphasizes problem-solving techniques, pattern recognition, conjecturing, induction, applications of varying nature, proof techniques, algorithm development and correctness, and numeric computations* Weaves numerous applications into the text* Helps students learn by doing with a wealth of examples and exercises: - 560 examples worked out in detail - More than 3,700 exercises - More than 150 computer assignments - More than 600 writing projects* Includes chapter summaries of important vocabulary, formulas, and properties, plus the chapter review exercises* Features interesting anecdotes and biographies of 60 mathematicians and computer scientists* Instructor's Manual available for adopters* Student Solutions Manual available separately for purchase (ISBN: 0124211828)




The Matching Law


Book Description

This impressive collection features Richard Herrnstein's most important and original contributions to the social and behavioral sciences--his papers on choice behavior in animals and humans and on his discovery and elucidation of a general principle of choice called the matching law. In recent years, the most popular theory of choice behavior has been rational choice theory. Developed and elaborated by economists over the past hundred years, it claims that individuals make choices in such a way as to maximize their well-being or utility under whatever constraints they face; that is, people make the best of their situations. Rational choice theory holds undisputed sway in economics, and has become an important explanatory framework in political science, sociology, and psychology. Nevertheless, its empirical support is thin. The matching law is perhaps the most important competing explanatory account of choice behavior. It views choice not as a single event or an internal process of the organism but as a rate of observable events over time. It states that instead of maximizing utility, the organism allocates its behavior over various activities in exact proportion to the value derived from each activity. It differs subtly but significantly from rational choice theory in its predictions of how people exert self-control, for example, how they decide whether to forgo immediate pleasures for larger but delayed rewards. It provides, through the primrose path hypothesis, a powerful explanation of alcohol and narcotic addiction. It can also be used to explain biological phenomena, such as genetic selection and foraging behavior, as well as economic decision making.




Two-Sided Matching


Book Description

Two-sided matching provides a model of search processes such as those between firms and workers in labor markets or between buyers and sellers in auctions. This book gives a comprehensive account of recent results concerning the game-theoretic analysis of two-sided matching. The focus of the book is on the stability of outcomes, on the incentives that different rules of organization give to agents, and on the constraints that these incentives impose on the ways such markets can be organized. The results for this wide range of related models and matching situations help clarify which conclusions depend on particular modeling assumptions and market conditions, and which are robust over a wide range of conditions. 'This book chronicles one of the outstanding success stories of the theory of games, a story in which the authors have played a major role: the theory and practice of matching markets ... The authors are to be warmly congratulated for this fine piece of work, which is quite unique in the game-theoretic literature.' From the Foreword by Robert Aumann