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Wage-vacancy contracts and coordination frictions

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  • Jacquet, Nicolas L.
  • Tan, Serene

Abstract

We consider a directed search model with risk-averse workers and risk-neutral entrepreneurs who can set up firms that post wage-vacancy contracts, i.e., contracts where firms can make payments to more than one applicant, and where the payments can be different for each applicant and be contingent on the number of applicants. We establish that the type of contracts the literature focuses on are not offered if firms can post wage-vacancy contracts. We show that there exists an equilibrium satisfying a Monotonic Expected Utility property which is efficient. Furthermore, we investigate the role of wage-vacancy contracts on welfare and competition.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 3 ()
Pages: 1064-1104

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:3:p:1064-1104

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Directed search; Contracts; Vacancies; Risk sharing; Competition;

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Citations

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Cited by:
  1. Athanasios Geromichalos, 2014. "Online Appendix to "Unemployment Insurance and Optimal Taxation in a Search Model of the Labor Market"," Technical Appendices 12-210, Review of Economic Dynamics.
  2. Athanasios Geromichalos, 2010. "Directed Search and Optimal Production," Working Papers 1016, University of California, Davis, Department of Economics.
  3. Athanasios Geromichalos, 2012. "Directed Search and the Bertrand Paradox," Working Papers 1221, University of California, Davis, Department of Economics.
  4. Manolis Galenianos & Philipp Kircher, 2012. "On the game-theoretic foundations of competitive search equilibrium," LSE Research Online Documents on Economics 29707, London School of Economics and Political Science, LSE Library.
  5. Athanasios Geromichalos, 2012. "Unemployment Insurance and Optimal Taxation in Search Models of the Labor Market," Working Papers 1218, University of California, Davis, Department of Economics.

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