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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," Review of Economic Studies, Oxford University Press, 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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    Cited by:

    1. Macho-Stadler, Inés & Pérez-Castrillo, David & Porteiro, Nicolás, 2014. "Coexistence of long-term and short-term contracts," Games and Economic Behavior, Elsevier, vol. 86(C), pages 145-164.
    2. Alós-Ferrer, Carlos & Prat, Julien, 2012. "Job market signaling and employer learning," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1787-1817.
    3. David Hugh-Jones & David Reinstein, 2010. "Losing Face," Jena Economic Research Papers 2010-068, Friedrich-Schiller-University Jena.
    4. Paulina Restrepo-Echavarria & Antonella Tutino & Anton Cheremukhin, 2012. "The Assignment of Workers to Jobs with Endogenous Information Selection," 2012 Meeting Papers 164, Society for Economic Dynamics.
    5. Elena Pastorino, 2013. "Job matching within and across firms," Staff Report 482, Federal Reserve Bank of Minneapolis.
    6. repec:esx:essedp:769 is not listed on IDEAS
    7. repec:aea:jeclit:v:55:y:2017:i:2:p:493-544 is not listed on IDEAS
    8. Franco, April Mitchell & Mitchell, Matthew & Vereshchagina, Galina, 2011. "Incentives and the structure of teams," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2307-2332.
    9. Paulina Restrepo-Echavarria & Antonella Tutino & Anton Cheremukhin, 2013. "A Theory of Targeted Search," 2013 Meeting Papers 664, Society for Economic Dynamics.
    10. Anderson, Axel, 2015. "A dynamic generalization of Becker's assortative matching result," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 290-310.
    11. Dai, Darong, 2012. "On the Existence of Pareto Optimal Endogenous Matching," MPRA Paper 43125, University Library of Munich, Germany.
    12. Darong Dai, 2013. "Independence and Uniqueness of the Mixed-Strategy Equilibrium in Social Networks," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(3), pages 79-96, December.

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