Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324797 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 371
Publisher: 
University of California, Department of Economics, Davis, CA
Abstract: 
We study dynamic decentralized two-sided matching where players' preferences evolve due to unanticipated experiences. Stability requires no pairwise common belief in blocking, but unanticipated experiences can destabilize matchings. We show the existence of self-confirming outcomes that are stable and do not lead to unanticipated experiences. We propose a decentralized matching process that prioritizes mutual optimal blocking pairs with probability 1 - ε and picks any other optimal blocking pair with ε, representing market friction. Frictions are necessary for convergence to self-confirming stable outcomes even without unawareness. We extend our results by allowing communication and show convergence to flirt-proof self-confirming outcomes.
Subjects: 
Decentralized matching
unawareness
transformative experiences
endogenous preferences
disclosure
JEL: 
D83
C70
Document Type: 
Working Paper

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