Properties of Path-Independent Choice Correspondences and Their Applications to Efficient and Stable Matchings

TL;DR

This paper introduces a new concept of path-independence for choice correspondences, showing it ensures rationalizability, structural properties, and applications to stable, efficient matchings, advancing theoretical understanding and practical matching models.

Contribution

It extends path-independence to choice correspondences, linking it to rationalizability, matroid structures, and stable matching theory, with applications to efficient matchings.

Findings

PI choice correspondences are rationalizable.

Choices form a generalized matroid under PI.

Cycle characterizations hold when PI and monotonicity are satisfied.

Abstract

Choice correspondences are crucial in decision-making, especially when faced with indifferences or ties. While tie-breaking can transform a choice correspondence into a choice function, it often introduces inefficiencies. This paper introduces a novel notion of path-independence (PI) for choice correspondences, extending the existing concept of PI for choice functions. Intuitively, a choice correspondence is PI if any consistent tie-breaking produces a PI choice function. This new notion yields several important properties. First, PI choice correspondences are rationalizabile, meaning they can be represented as the maximization of a utility function. This extends a core feature of PI in choice functions. Second, we demonstrate that the set of choices selected by a PI choice correspondence for any subset forms a generalized matroid. This property reveals that PI choice correspondences exhibit a nice structural property. Third, we establish that choice correspondences rationalized by ordinally concave functions inherently satisfy the PI condition. This aligns with recent findings that a choice function satisfies PI if and only if it can be rationalized by an ordinally concave function. Building on these theoretical foundations, we explore stable and efficient matchings under PI choice correspondences. Specifically, we investigate constrained efficient matchings, which are efficient (for one side of the market) within the set of stable matchings. Under responsive choice correspondences, such matchings are characterized by cycles. However, this cycle-based characterization fails in more general settings. We demonstrate that when the choice correspondence of each school satisfies both PI and monotonicity conditions, a similar cycle-based characterization is restored. These findings provide new insights into the matching theory and its practical applications.