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Assortative matching through signals

  • Friedrich Poeschel

When agents do not know where to find a match, they search. However, agents could direct their search to agents who strategically choose a certain signal. Introducing cheap talk to a model of sequential search with bargaining, we find that signals will be truthful if there are mild complementarities in match production: supermodularity of the match production function is a necessary and sufficient condition. It simultaneously ensures perfect positive assortative matching, so that single-crossing property and sorting condition coincide. As the information from signals allows agents to avoid all unnecessary search, this search model exhibits nearly unconstrained efficiency.

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Paper provided by Job Market Papers in its series 2013 Papers with number ppo178.

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Date of creation: 07 Dec 2013
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Handle: RePEc:jmp:jm2013:ppo178
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