Stability and Bayesian Consistency in Two-sided Markets


Date & Time:Dec. 17, 2019  13:30 - 15:00

Venue:SEM501 Meeting Room

Speaker:Qingmin Liu (Columbia University)


We propose a criterion of stability for two-sided markets with asymmetric information. A central idea is to formulate matching functions, off-path beliefs conditional on counterfactual pairwise deviations, and on-path beliefs in the absence of such deviations. A matching-belief configuration is stable if the matching is individually rational with respect to the system of on-path beliefs and is not blocked with respect to the system of off-path beliefs. The formulation provides a language for assessing matching outcomes with respect to their supporting beliefs and opens the door to further belief-based refinements. The main refinement analyzed in the paper requires the Bayesian consistency of on-path and off-path beliefs with prior beliefs. We also define concepts of Bayesian efficiency, the rational expectations competitive equilibrium, and the core. Their contrast with pairwise stability manifests the role of information asymmetry in matching formation.

Speaker Biography: 

Qingmin Liu received his Ph.D. in Stanford University, and now he is an associate professor of economics at Columbia University. Professor Liu's research focuses on Microeconomic theory, Dynamic games, Innovation, Matching, Epistemic foundations of game theory. His research has been published in the top-level economic journals,  such as American Economic Review, Journal of Political Economy, Review of Economic Studies,Econometrica, Journal of Economic Theory, Theoretical Economics etc.