Strategic Issues in One-to-One Matching with Externalities

Abstract

We consider strategic issues in one-to-one matching with externalities. We show that no core (stable) mechanism is strategy-proof, extending an impossibility result of [Roth, A. E. [1982] The economics of matching: Stability and incentives, Math. Oper. Res. 7(4), 617-628] obtained in the absence of externalities. Moreover, we show that there are no limits on successful manipulation of preferences by coalitions of men and women, in contrast with the result of [Demange, G., Gale, D. and Sotomayor, M. [1987] A further note on the stable matching problem, Discrete Appl. Math. 16(3), 217-222] obtained in the absence of externalities.