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Interviews and Adverse Selection

Author

Listed:
  • Jens Josephson
  • Joel Shapiro

Abstract

Interviewing in professional labor markets is a costly process for firms. Moreover, poor screening can have a persistent negative impact on firms bottom lines and candidates' careers. In a simple dynamic model where firms can pay a cost to interview applicants who have private information about their own ability, potentially large inefficiencies arise from information-based unemployment, where able workers are rejected by firms because of their lack of offers in previous interviews. This effect may make the market less efficient than random matching. We show that the first best can be achieved using either a mechanism with transfers or one without transfers.

Suggested Citation

  • Jens Josephson & Joel Shapiro, 2008. "Interviews and Adverse Selection," Working Papers 349, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:349
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    References listed on IDEAS

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    1. Li, Hao & Rosen, Sherwin, 1998. "Unraveling in Matching Markets," American Economic Review, American Economic Association, vol. 88(3), pages 371-387, June.
    2. Josephson, Jens & Shapiro, Joel, 2008. "Interviews and Adverse Selection," CEPR Discussion Papers 6837, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Robin S. Lee & Michael Schwarz, 2017. "Interviewing in two-sided matching markets," RAND Journal of Economics, RAND Corporation, vol. 48(3), pages 835-855, August.
    2. Josephson, Jens & Shapiro, Joel, 2008. "Interviews and Adverse Selection," CEPR Discussion Papers 6837, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Decentralized Labor Markets; Professional Labor Markets; Asymmetric Information; Interview costs; Matching;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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