Part IIB, Paper 4, Economic Theory and Analysis

Lent 2024

Aytek Erdil

Lecture 2

30 January 2024

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From last lecture

Finite sets of men and women, where each individual has a strict
preference ranking over the members of the opposite sex.

A matching is a function µ : M ∪ W → M ∪ W such that

µ(m) ∈ W ∪ {m} and µ(w ) ∈ M ∪ {w } and µ(µ(i)) = i for all
i ∈ M ∪ W.

Our notion of cooperative equilibrium is that of pairwise stability

which aims to capture the idea of robustness to individual and pairwise
blockings, where:

I µ blocked by an individual i if i i µ(i)

I µ blocked by a pair (m, w ) if w m µ(m) and m w µ(w )

Gale & Shapley: a stable matching exists and can be found via a
deferred acceptance algorithm.

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The outline of today's lecture

Properties of stable matchings. (Yes, there can be many stable

matchings.)

Comparing stable matchings from one side's perspective, and

polarisation of interests.

Singles Theorem.

Matching mechanisms and their strategic properties.

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Multiplicity of stable matchings

Let M = {a, b}, W = {x, y } and preferences %:

%a %b %x %y
x y b a
y x a b

The outcome of the men-proposing DA algorithm (denoted DAM ) is

 
M a b
DA (%) =
x y

The women-proposing DA algorithm (denoted DAW ) will result in

 
W a b
DA (%) =
y x

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Polarisation of interests

Theorem 1.
(i) Every manprefers (weakly or strictly) the outcome of the
men-proposing DA algorithm to any other stable matching.

(ii)Every woman prefers (weakly or strictly) any stable matching

to the outcome of the men-proposing DA algorithm.

The outcome of the men-proposing DA is called the men-optimal

stable matching.

It is also the women-pessimal stable matching.

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Proof of (i)

Call w achievable for m if there is some stable matching where w is

matched with m.
It suces to show that no man is rejected by a woman achievable for him
in any step of DA.

Suppose otherwise, and consider the rst step where a man, say m, is
rejected by an achievable woman, say w. Let µ be a stable matching
where µ(m) = w .
So w is holding some other man m0 at the end of this step, and m0 w m.
The women m0 likes more than w have all rejected m0 in earlier steps.

Since this is the earliest step of DA where a man is rejected by an

achievable woman, m0 has't proposed to any achievable woman yet.

In particular, he has not proposed to µ(m0 ) yet, and thus w m0 µ(m0 ).
Hence (m0 , w ) blocks µ, contradicting stability of µ. 

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Some welfare results

Theorem 2. Every stable matching is Pareto ecient.

Theorem 3. The common preferences of the two sides of the market are
opposed on the set of stable matchings, that is:

if µ and µ0 are stable, then µ M µ0 if and only if µ0 W µ.

Exercise: prove the above statements. Then show that Theorem 3

together with part (i) of Theorem 1 imply part (ii) of Theorem 1.

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Singles Theorem (ST)

The set of singles is the same across all stable matchings.

Proof. Let µ be the men-optimal stable matching, and let ν be any other
stable matching.

Those men matched at ν must be matched at µ. So

[no of matched men at ν] ≤ [no of matched men at µ]

Likewise

[no of matched women at µ] ≤ [no of matched women at ν]

But of course, at every matching, the number of matched men is equal

to the number of matched women.

Hence, the above inequalities are equalities, and in particular, the number
of matched men (and women) is constant across all matchings.

Since those men matched at ν are also matched at µ, the same men are
matched across all matchings.

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Mechanism

A direct matching mechanism is one which solicits agents'

preferences over potential partners, and announces a matching for
each revelation of preferences.

Formally:

A preference prole % is a vector of preferences (%i )i∈M∪W .

We can also denote it as %= (%M , %W ).

Let Π be the set of all possible preference proles %.

Let M be the set of all possible matchings between M and W .

A direct mechanism is a function from Π to M.

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Strategic behaviour

A direct mechanism denes a game where man m's strategy set is the set
of all possible rankings over W ∪ m.

Instead of numerical payos, each strategy prole (i.e., revealed

preference prole) leads to a matching (the outcome of the mechanism)

A direct mechanism f is strategy-proof if truth-telling is a weakly

dominant strategy for every agent:

fi (%i , %−i ) %i fi (%0i , %−i )

for all

I %i i 's true preferences

I %0i any possible misreport for i

I %−i any possible report by other agents.

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DA is not strategy-proof

Let M = {a, b}, W = {x, y } and

%a %b %x %y
x y b a
y x a b

With truthful revelation, men-proposing DA gives µ = (ax, by ).

Instead, if x 0x : b , i.e., if she says only b is acceptable to her,
reports
0
then the DA outcome is µ = (ay , bx), which x prefers to µ(x) = a.

So DA is not strategy-proof. And more generally

Theorem
There is no stable mechanism that is strategy-proof.

Proof. Exercise. 

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Truncation strategies

In the men-proposing DA, a woman can game the procedure by

truncating her rank-order list, and stopping with the man who is
the best achievable for her in any stable match.

For example if ν is the women-optimal stable matching, and

ν(w ) = m, then instead of reporting her true preference ranking
a w b w · · · w m w n w · · · , she could truncate her list,
and report a w b w · · · w m.

Theorem
Under the men-proposing DA, if all other participants are truthful,

a woman can achieve her best achievable man using the above

strategy.

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Proof of the theorem

The DA must yield a stable matching.

If participants report as in Theorem, one stable matching is the

woman-optimal matching under the original true preferences.

This gives the manipulator her best possible man.

Under the reported preferences, any other matching would have to

give the woman either someone better, or leave her unmatched.

By the Singles Theorem, she can't be unmatched in some other

stable matching. She also can't get someone better because
whatever would block under the true preferences will block under
the reports.
Therefore, she must get her best possible man. 

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DA is strategy-proof for the proposers

Theorem. The men-proposing DA is strategy-proof for men.

Proof. Fix the reports of all the women and all but one man.

We will show that whatever report the man m starts with, he can
make a series of changes to his report leading to a truthful report,
and making him (weakly) better o at every step.

Suppose man m reports a ranking that leads to matching µ where

he is matched with w .

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Proof of the theorem

Each of the following changes improves his outcome.

(1) If he reports w as his only acceptable woman, he will be matched

with w .

[Because µ is still stable (why?), so he will never be single in any stable

matching.]

(2) Reporting honestly, but truncating at w, he would not be single.

[If there was a stable matching where m is single, that matching would
be stable in (1).]

So m gets someone he likes at least as much as w.

(3) Reporting honestly with no truncation.

[This won't aect DA relative to the above strategy, because he will not
be rejected by whom he would be matched in (2).] 

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When preferences are not strict

Stability does not imply Pareto eciency.

There might not be a stable matching which every man prefers to all
other matchings.

The set of singles is not necessarily same across all stable matchings.
(Not even the number of singles is the same.)

Example. Let M = {a, b, c}, W = {x, y }.

%a %b %c
x ∼y x x %x %y
b c a∼b∼c a∼b∼c
y y

There are three stable matchings

     
a b c a b c a b c
, ,
x b c y x c y b x

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