A Theory of Partially Directed Search
AbstractThis paper studies a search model of the labor market where firms have private information about the quality of their vacancies, they can costlessly communicate with unemployed workers before the beginning of the application process, but the content of the communication does not constitute a contractual obligation. At the end of the application process, wages are determined as the outcome of an alternating offer bargaining game. The model is used to show that vague non-contractual announcements about compensation - such as those one is likely to find in help-wanted ads - can be correlated with actual wages and can partially direct the search strategy of workers.
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Bibliographic InfoPaper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 09-006.
Length: 24 pages
Date of creation: 02 Sep 2007
Date of revision:
Random search; directed search; non-cooperative bargaining; Coase conjecture; cheap-talk games;
Other versions of this item:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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