Template-Type: ReDIF-Paper 1.0
Author-Name: Burak Can
Author-Name-First: Burak
Author-Name-Last: Can
Author-Email: b.can@maastrichtuniversity.nl
Author-Workplace-Name: Department of Data Analytics and Digitalisation, Maastricht University
Author-Name: Mohsen Pourpouneh
Author-Name-First: Mohsen
Author-Name-Last: Pourpouneh
Author-Email: mohsen@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name: Ton Storcken
Author-Name-First: Ton
Author-Name-Last: Storcken
Author-Email: t.storcken@maastrichtuniversity.nl
Author-Workplace-Name: Department of Quantitative Economics, Maastricht University
Title: Cost of transformation: a measure on matchings 
Abstract: This paper constructs a normative framework to quantify the difference (distance) between outcomes of market mechanisms in matching markets. We investigate the "cost of transformation" from one market mechanism to another, based on the differences in the outputs of these mechanisms, i.e., the matchings. Several conditions are introduced to ensure that this cost reflects the welfare effect of the transformation on individuals. We find a class of measures called scaled Borda measures, which is characterized by these conditions. Several possible applications of these measures in different markets are also discussed, such as measuring how unstable, how unfair, or how inefficient a mechanism (or a matching) is.
Length: 42 pages
Creation-Date: 2020-08
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2020/IFRO_WP_2020_10.pdf
File-Format: Application/pdf
Number: 2020/10
Classification-JEL: C78, D61, D63
Keywords: matching markets, distance function, metrics, cost of stability
Handle: RePEc:foi:wpaper:2020_10