Two Sided Matching with Intrinsic Preferences Over Stated Rankings

Abstract: We extend the problem of two-sided matching by allowing motives such as shame, pride, embarrassment and insult to enter into agents’considerations. This is accomplished by de…ning agents’preferences so as to depend on stated rankings (during the matching process). The aim is to derive a matching mechanism such that each matching which is the result of an equilibrium of its induced revelation game is pair-wise stable. We then study the Gale Shapley mechanism in this environment and provide an impossibility theorem for individually rational matching mechanisms.
We also introduce a sequential variant of the Gale Shapley mechanism that guarantees pairwise stability of matchings generated in equilibria of its induced revelation game.

Keywords: Market Design; Behavioral Market Design; Two Sided Matching; Reciprocity; Behavioral Mechanism Design; Psychological Games