Cupid’s Invisible Hand: Social Surplus and Identification in Matching Models

@article{Galichon2015CupidsIH,
  title={Cupid’s Invisible Hand: Social Surplus and Identification in Matching Models},
  author={Alfred Galichon and Bernard Salani'e},
  journal={Behavioral \& Experimental Economics eJournal},
  year={2015}
}
We investigate a model of one-to-one matching with transferable utility when some of the characteristics of the players are unobservable to the analyst. We allow for a wide class of distributions of unobserved heterogeneity, subject only to a separability assumption that generalizes Choo and Siow (2006). We first show that the stable matching maximizes a social gain function that trades off the average surplus due to the observable characteristics and a generalized entropy term that reflects… 
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