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Dynamic Matching and Evolving Reputations

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  • Axel Anderson
  • Lones Smith

Abstract

This paper introduces a general model of matching that includes evolving public Bayesian reputations and stochastic production. Despite productive complementarity, assortative matching robustly fails for high discount factors, unlike in Becker (1973) . This failure holds around the highest (lowest) reputation agents for "high skill" ("low skill") technologies. We find that matches of likes eventually dissolve. In another life-cycle finding, young workers are paid less than their marginal product, and old workers more. Also, wages rise with tenure but need not reflect marginal products: information rents produce non-monotone and discontinuous wage profiles. Copyright , Wiley-Blackwell.

Suggested Citation

  • Axel Anderson & Lones Smith, 2010. "Dynamic Matching and Evolving Reputations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 3-29.
    • Handle: RePEc:oup:restud:v:77:y:2010:i:1:p:3-29
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2009.00567.x
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