In many countries, taxes on businesses are less progressive than labor income taxes. This paper provides a justification for this pattern based on adverse selection that entrepreneurs face in credit markets. Individuals choose between becoming entrepreneurs or workers and differ in their skill...

This paper considers marriage problems, roommate problems with nonempty core, and college admissions problems with responsive preferences. All stochastically stable matchings are shown to be contained in the set of matchings which are most robust to one-shot deviation.

We investigate a canonical search-theoretic model without entry. Two agents are randomly matched with a long side being rationed. The matched agents face a pair of randomly drawn non-transferable payoffs, and then choose whether or not to form a partnership subject to a small probability of...

The rise in world trade since 1970 has been accompanied by a rise in the geographic span of control of management and, hence, also a rise in the effective international mobility of labor services. We study the effect of such a globalization of the worldʼs labor markets. The worldʼs welfare...

Choo and Siow (2006) [7] proposed a model for the marriage market which allows for random identically distributed McFadden-type noise in the preferences of each of the participants. In this note we exhibit a strictly convex function whose derivatives vanish precisely at the equilibria of their...

We revisit the school choice problem with consent proposed by Kesten [12], which seeks to improve the efficiency of the student-optimal deferred acceptance algorithm (DA) by obtaining students' consent to give up their priorities. We observe that for students to consent, we should use their...

We consider a one-sided assignment market or exchange network with transferable utility and the dynamics of bargaining in such a market. Our dynamical model is local, involving iterative updates of ‘offers’ based on estimated best alternative matches, in the spirit of pairwise Nash...