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Information Frictions and Employee Sorting between Start-Ups

Author

Listed:
  • Kevin A. Bryan
  • Mitchell Hoffman
  • Amir Sariri

Abstract

Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based start-ups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all start-ups' science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds, restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms' right-tail outcomes. Despite these benefits, workers make posttreatment bets indicating highly overoptimistic beliefs about start-up success, suggesting a problem of broader informational deficits.

Suggested Citation

  • Kevin A. Bryan & Mitchell Hoffman & Amir Sariri, 2026. "Information Frictions and Employee Sorting between Start-Ups," American Economic Journal: Applied Economics, American Economic Association, vol. 18(2), pages 369-406, April.
    • Handle: RePEc:aea:aejapp:v:18:y:2026:i:2:p:369-406
    DOI: 10.1257/app.20240722
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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