Is it correct to say that preferences in the classic Gale and Shapley College Admissions problem are quasi-linear?
Or is this something thats introduced later in the literature, vis a vis Shapley and Shubik (1971), Kelso and Crawford (1982), etc?
$\begingroup$
$\endgroup$
Add a comment
|
1 Answer
$\begingroup$
$\endgroup$
6
Gale and Shapley barely make any assumptions about preferences. They don't need a functional form, simply an ordinal ranking of the options. Moreover, there are no transfers in this setting, only the discrete matching options.
Even Kelso and Crawford do not use quasi-linear utility. They assume some utility function that is increasing and continuous in salary, but not necessarily linearly increasing.
In Shapley and Shubik (1971) monetary transfers enter linearly. However, I wouldn't call this quasi-linear utility, because in quasi-linear utility most people have the following functional form over a good $x$ and money $m$ in mind: $u(x,m) = v(x) - m$, where $v$ is a continuous function. In their model, the $v(x)$ is simply the money value of house $x$, where the houses are district options.
-
$\begingroup$ Do Gale and Shapley establish the existence of a core? $\endgroup$ Dec 7, 2020 at 9:00
-
1$\begingroup$ They may not mention it as "the core." However, they prove the existence of stable allocations, which is the same as "the core" in their setting. $\endgroup$– BayesianDec 7, 2020 at 9:01
-
$\begingroup$ Does Shapley and Shubik (1971) use quasi-linear preferences? $\endgroup$ Dec 7, 2020 at 9:06
-
-