Essays on Microeconomics under Non-Transferable Utility

Abstract

This thesis consists of three chapters on microeconomics under non-transferable utility. In Chapter 1, I analyze a canonical two-sided many-to-one matching market that has two disjoint sides in an economy (firms-workers). I present my analysis within a decentralized search model with frictions, where a finite number of firms and workers meet randomly until the market clears. I compare the stable matchings of the underlying market and equilibrium outcomes of the decentralized model when time is nearly costless. I show that stable matchings are not obtained as easily. In particular, there may be no Markovian equilibrium that uniformly implements either the worker- or the firm-optimal stable matching in every subgame. Moreover, multiple vacancies enable firms to implicitly collude and achieve unstable but firm-preferred matchings, even under Markovian equilibria. In Chapter 2, which is joint work with Orhan Aygün, an extension to the many-to-one placement problem is analyzed, where some doctors are exogenously guaranteed a seat at a program, which defines a lower bound on their assignment. We define a central planner's expectations as axioms and characterize the mechanism meeting these axioms. Finally, Chapter 3, joint work with Cavit Görkem Destan, presents a model demonstrating politicians strategically adopt extreme positions even when the voters are homogeneous and moderate. We examine the behavior of voters and electoral candidates under the assumption that the salience of political issues affects voting decisions through voter preferences. When candidates differ in budget constraints and voters are prone to salience bias, politicians may use this to shape voter preferences and commit to extreme policies.