model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal …-agent matching market. A simple mechanism to implement the set of stable outcomes is proposed. Finally, we put forward examples of …

performance. Our results are consistent with a simple investment-cum-matching model: pairing the worst performing individuals with … the best yields 20% lower first stage effort than random matching. Pairing the best with the best, however, yields 5 …% higher first stage effort than random matching. In line with the theory the latter result is more pronounced when the task …

that have different degrees of overconfidence. The channel through which the matching occurs is the share of bonus payments … to an assortative matching between overconfident managers and banks with a larger bailout probability. We then test the …