Note on solving one-to-one matching models with linear transferable utility

Code

• github.com/esbenscriver/SolveOneToOneMatching
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Abstract

We derive a system of fixed-point equations for the equilibrium transfers in a class of one-to-one matching models with linear transferable utility. We then show that, when the degree of substitution between alternatives is bounded from above, the derived system of equations constitutes a contraction mapping. As a result, fixed-point iterations are guaranteed to converge to the unique distribution of equilibrium transfers.

Reproductions