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Job search with recall and reneging

Author

Listed:
  • Guo, Junjie

    (Department of Economics, University of Wisconsin-Madison)

Abstract

This paper studies a model of job search with two novel decisions related to anti-competitive practices by firms and other parties in the labor market. First, instead of making an exploding offer requiring an immediate decision, a firm may allow a worker to recall its offer within a period of time. Second, after accepting an offer, a worker may renege on it before the job starts. The model suggests that the two decisions are related to each other, and a small cost of reneging is critical for the coexistence of exploding offers, recall, and reneging. Policies that discourage workers from reneging could induce firms to make more exploding offers with lower wages, contradicting other policies for exploding offers and reducing the value of job search for workers.

Suggested Citation

  • Guo, Junjie, 0. "Job search with recall and reneging," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6806
    as

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    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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