Matching

Matching is a very important concept in the real world as well as economics. When a product is assigned to a consumer, we can call this as a matching. In most markets, matching is done via a pricing mechanism that suppliers and consumers come to an agreement which in the form of prices. However, there are some markets where there is no price or traditional product. For example, in the marriage market, there is no clear price; in addition, in the education market, people cannot just pay the prices and go to universities (though in some cases this does exist to some extent).

There is a matching method which was proposed by Economics Nobel Prize winners, Sharpley and Gale. First, one party (proposers) proposes first and the other party (receivers) accept the candidates which they favour first if they are approached by multiple candidates; the left people then proposes again and the receivers then select their most preferred candidates; this process will be repeated till the last receiver chooses the candidate. The receivers and proposers can be switched but this will deliver a different outcome and the proposers generally benefit from this process comparing with the receivers; this is why students are given the choices to pick up their universities, students can benefit from this process. This process encourages proposers to reveal their true preferences; however, in the real world, people often tend to hide their true preferences and make their second or third preferred options their first options since they are afraid that they can easily lose out competitions if they all go for their first choices. Such deviation from true preference could be explained by people having limited proposing opportunities.

Overall, matching is very important in terms of resource allocation and efficiency, and there is great challenge in matching mechanism design as well.