Econometrica: Jul 2007, Volume 75, Issue 4
Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities
Patrick Legros, Andrew F. NewmanWe present sufficient conditions for monotone matching in environments where utility is not fully transferable between partners. These conditions involve not only complementarity in types of the total payoff to a match, as in the transferable utility case, but also monotonicity in type of the degree of transferability between partners. We apply our conditions to study some models of risk sharing and incentive problems, deriving new results for predicted matching patterns in those contexts.
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