## Abstract

This paper studies two-sided matching markets with non-transferable utility when the number of market participants grows large. We consider a model in which each agent has a random preference ordering over individual potential matching partners, and agents' types are only partially observed by the econometrician. We show that in a large market, the inclusive value is a sufficient statistic for an agent's endogenous choice set with respect to the probability of being matched to a spouse of a given observable type. Furthermore, while the number of pairwise stable matchings for a typical realization of random utilities grows at a fast rate as the number of market participants increases, the inclusive values resulting from any stable matching converge to a unique deterministic limit. We can therefore characterize the limiting distribution of the matching market as the unique solution to a fixed-point condition on the inclusive values. Finally we analyze identification and estimation of payoff parameters from the asymptotic distribution of observable characteristics at the level of pairs resulting from a stable matching.

Original language | English (US) |
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Pages (from-to) | 897-941 |

Number of pages | 45 |

Journal | Econometrica |

Volume | 83 |

Issue number | 3 |

DOIs | |

State | Published - May 1 2015 |

## Keywords

- Discrete choice
- Large games
- Matching markets
- Multiple equilibria
- Pairwise stability

## ASJC Scopus subject areas

- Economics and Econometrics