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The even split rule in positive assortative matching

Version 2 2024-06-13, 11:48
Version 1 2019-02-07, 13:52
journal contribution
posted on 2024-06-13, 11:48 authored by H Jia
Many economic models, especially in two-sided matching literature, involve breaking down a supermodular function into two supermodular functions according to a certain allocation rule. The conventional wisdom is to invoke the Nash bargaining solution, which boils down to an even split rule within the transferable utility framework. This paper rationalizes the use of the Nash bargaining solution in a two-sided matching model by showing that the even split rule is the only allocation which allows the net benefit functions to inherit supermodularity from the joint surplus function, which is necessary to ensure positive assortative matching.

History

Journal

Journal of mathematical economics

Volume

81

Pagination

57-61

Location

Amsterdam, The Netherlands

ISSN

0304-4068

eISSN

1873-1538

Language

eng

Publication classification

C1 Refereed article in a scholarly journal

Copyright notice

2019, Elsevier B.V.

Publisher

Elsevier

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