Stable Matching in Large Economies

Abstract

We study stability of two-sided many-to-one matching in which firms' preferences for workers may exhibit complementarities. Although such preferences are known to jeopardize stability in a finite market, we show that a stable matching exists in a large market with a continuum of workers, provided that each firm's choice is convex and changes continuously as the set of available workers changes. We also study the existence and structure of stable matchings under preferences exhibiting substitutability and indifferences in a large market. Building on these results, we show that an approximately stable matching exists in large finite economies. We extend our framework to ensure a stable matching with desirable incentive and fairness properties in the presence of indifferences in firms' preferences.

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