Stable Outcomes for Two-Sided Contract Choice Problems

Abstract

We show, that a simple generalization of the Deferred Acceptance Procedure with firms proposing due to Gale and Shapley(1962), yeild outcomes for a two-sided contract choice problem, which necessarily belong to the core and are Weakly Pareto Optimal for firms. Under additional assumptions: (a) given any two distinct workers, the set of yields acheivable by a firm with the first worker is disjoint from the set of yields acheivable by it with the second, and (b) the contract choice problem is pair-wise efficient, we prove that there is no stable outcome at which a firm can get more than what it gets at the unique outcome of our procedure.