Abstract
Mechanisms which implement stable matchings are often observed to work well in practice,
even in environments where the stable outcome is not unique, information is complete,
and the number of players is small. Why might individuals refrain from strategic manipulation,
even when the complexity cost of manipulation is low? I study a two-sided, one-to-one
matching problem with no side transfers, where utility is interdependent in the following
intuitive sense: an individual's utility from a match depends not only on her preference
ranking of her assigned partner, but also on that partner's ranking of her. I show
that, in a world of complete information and linear interdependence, a unique stable
matching emerges, and is attained by a modified Gale-Shapley deferred acceptance algorithm.
As a result, a stable rule supports truth-telling as an equilibrium strategy. Hence,
these results offer a new intuition for why stable matching mechanisms seem to work
well in practice, despite their theoretic manipulability: individuals may value being
liked.
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