Fox Hsu Yang (2015) - Unobserverd Heterogeneity in Matching Games with an Application to Venture Capital
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- If matching based on observed characteristics is found to be important, it is a reasonable conjecture that matching based on unobserved characteristics is also important.
- This paper investigates what data on the sorting patterns between agents can tell us about the distributions of unobserved agent characteristics relevant for sorting.
- We use data on many markets with finite numbers of players and different realizations of observables and unobservables in each market.
- We require at least one continuous, observable per match or per agent.
- In the baseline transferable utility matching game, the primitive that governs sorting is the matrix that collects the production values for each potential match in a matching market. The production level of each match is additively separable in observable and unobservable terms.
