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Preference Signaling in Matching Markets

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Author Info

  • Peter Coles
  • Alexey Kushnir
  • Muriel Niederle

Abstract

Many labor markets share three stylized facts: employers cannot give full attention to all candidates, candidates are ready to provide information about their preferences for particular employers, and employers value and are prepared to act on this information. In this paper we study how a signaling mechanism, where each worker can send a signal of interest to one employer, facilitates matches in such markets. We find that introducing a signaling mechanism increases the welfare of workers and the number of matches, while the change in firm welfare is ambiguous. A signaling mechanism adds the most value for balanced markets. (JEL C78)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.2.99
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 5 (2013)
Issue (Month): 2 (May)
Pages: 99-134

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Handle: RePEc:aea:aejmic:v:5:y:2013:i:2:p:99-134

Note: DOI: 10.1257/mic.5.2.99
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References

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  1. Coles, Peter Andrew & Cawley, John & Levine, Phillip B. & Roth, Alvin E. & Siegfried, John J. & Niederle, Muriel, 2010. "The Job Market for New Economists: A Market Design Perspective," Scholarly Articles 5343168, Harvard University Department of Economics.
  2. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers 5543, C.E.P.R. Discussion Papers.
  3. Kushnir, Alexey, 2013. "Harmful signaling in matching markets," Games and Economic Behavior, Elsevier, vol. 80(C), pages 209-218.
  4. Julien, B. & Kennes, J. & King, I., 1998. "Bidding for Labour," Discussion Papers dp98-03, Department of Economics, Simon Fraser University.
  5. Alexey Kushnir, 2009. "Matching Markets with Signals," Working Papers 2009.39, Fondazione Eni Enrico Mattei.
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Cited by:
  1. Kushnir, Alexey, 2013. "Harmful signaling in matching markets," Games and Economic Behavior, Elsevier, vol. 80(C), pages 209-218.
  2. Eric Budish & Estelle Cantillon, 2012. "The Multi-unit Assignment Problem: Theory and Evidence from Course Allocation at Harvard," ULB Institutional Repository 2013/99376, ULB -- Universite Libre de Bruxelles.
  3. Janine Balter & Michela Rancan & Olena Senyuta, 2014. "Truncation in the Matching Markets and Market Ineffciency," RSCAS Working Papers 2014/04, European University Institute.
  4. Adrian de Groot Ruiz & Theo Offerman & Sander Onderstal, 2011. "An Experimental Study of Credible Deviations and ACDC," Tinbergen Institute Discussion Papers 11-153/1, Tinbergen Institute.

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