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Interviews and Adverse Selection

  • Josephson, Jens
  • Shapiro, Joel

Interviewing in professional labour 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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6837.

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Date of creation: May 2008
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Handle: RePEc:cpr:ceprdp:6837
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  1. Leonard, Herman B, 1983. "Elicitation of Honest Preferences for the Assignment of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 461-79, June.
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  9. Jens Josephson & Joel Shapiro, 2008. "Interviews and adverse selection," Economics Working Papers 1093, Department of Economics and Business, Universitat Pompeu Fabra.
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