Preference Structure and Random Paths to Stability in Matching Markets

This paper examines how preference correlation and intercorrelation combine to influence the length of a decentralized matching market's path to stability. In simulated experiments, marriage markets with various preference specifications begin at an arbitrary matching of couples and proceed toward stability via the random mechanism proposed by Roth and Vande Vate (1990). The results of these experiments reveal that fundamental preference characteristics are critical in predicting how long the market will take to reach a stable matching. In particular, intercorrelation and correlation are shown to have an exponential impact on the number of blocking pairs that must be randomly satisfied before stability is attained. The magnitude of the impact is dramatically different, however, depending on whether preferences are positively or negatively intercorrelated.

Teaching Time Preference and Human Impatience: The Billionaire Game

The Billionaire Game involves students in discussing time preference, or what Fisher (1930) calls human impatience. The game can facilitate the introduction of the material on present value and discounting or discussions on such issues as investment in human capital and the intertemporal consumption-saving decision. Thus, the game can facilitate discussions in a number of economics courses.