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Interviews and Adverse Selection

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  • Shapiro, Joel
  • Josephson, Jens

Abstract

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.

Suggested Citation

  • Shapiro, Joel & Josephson, Jens, 2008. "Interviews and Adverse Selection," CEPR Discussion Papers 6837, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6837
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    References listed on IDEAS

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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. Shapiro, Joel & Josephson, Jens, 2008. "Interviews and Adverse Selection," CEPR Discussion Papers 6837, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    Asymmetric information; Decentralized labour markets; Interview costs; Matching; Professional labour markets;
    All these keywords.

    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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