ECONOMETRICS: Estimating Matching Games with Profit and Price Data; Professor Jeremy Fox (Rice University)

Abstract

Empirical methods for transferable-utility matching games have previously been developed using the key outcome of the matches formed in equilibrium. We explore identification and estimation of match production functions and agent valuation functions using data on two additional outcomes of such matching games: monetary transfers (prices) and profits. We provide identification results for nonparametric models for the case of data on profits and for more parametric models for the case of data on prices. We provide estimators paralleling the identification results for both profit data and price data. Importantly, our identification results allow for agents to have valuations defined over the unmeasured characteristics of potential partners.

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