Ignorance is bliss? Rejection and discouragement in on-the-job search

Searching for jobs often involves repeated rejection. If discouraged searchers reduce search effort in response, this decreases their probability of finding a (good) match, with negative implications for the individual searcher and for the efficiency with which talent is allocated to jobs in general. Using a lab-in-the-field experiment with young workers in South Africa, I examine whether experiencing repeated rejection discourages further search. Participants repeatedly choose between two tasks: a high-return task with frequent feedback containing rejection signals, and a low-return task without immediate rejection feedback. By experimentally varying monetary rewards and rejection exposure, while controlling for learning and risk preferences, I isolate the psychological cost of rejection as a driver of search behaviour. I find that subjects choose to reduce their expected earnings to avoid rejection signals. This behaviour suggests that rejection imposes a psychological cost that motivates active information avoidance and decreases job search.