Monday, November 11, 2013
Econometrics and Applied Micro Seminar
Unobserved Heterogeneity in Matching Games
Jeremy Fox, Associate Professor, Department of Economics, University of Michigan
Agents in two-sided matching games vary in characteristics that are unobservable in typical data on matching markets. We investigate the identiﬁcation of the distribution of these unobserved characteristics using data on who matches with whom. The distribution of match-speciﬁc unobservables cannot be fully recovered without information on unmatched agents, but the distribution of a combination of unobservables, which we call unobserved complementarities, can be identiﬁed. Knowledge of the unobserved complementarities is sufﬁcient to construct certain counterfactuals. The distribution of agent—speciﬁc unobservables is identiﬁed under different conditions.