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Preference Signaling in Matching Markets

  • Peter Coles
  • Alexey Kushnir
  • Muriel Niederle

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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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
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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References listed on IDEAS
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  1. 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.
  2. Peter Coles & John Cawley & Phillip B. Levine & Muriel Niederle & Alvin E. Roth & John J. Siegfried, 2010. "The Job Market for New Economists: A Market Design Perspective," Journal of Economic Perspectives, American Economic Association, vol. 24(4), pages 187-206, Fall.
  3. Alexey Kushnir, 2010. "Harmful signaling in matching markets," IEW - Working Papers 509, Institute for Empirical Research in Economics - University of Zurich.
  4. Julien, B. & Kennes, J. & King, I., 1998. "Bidding for Labour," Discussion Papers dp98-03, Department of Economics, Simon Fraser University.
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