Searching Forever After

Yair Antler and Benjamin Bachi

No 14103, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study a model of two-sided search in which agents' reasoning is coarse. In equilibrium, the most desirable agents behave as if they were fully rational, while, for all other agents, coarse reasoning results in overoptimism with regard to their prospects in the market. Consequently, they search longer than optimal. Moreover, agents with intermediate match values may search indefinitely while all other agents eventually marry. We show that the share of eternal singles converges monotonically to 1 as search frictions vanish. Thus, improvements in the search technology may backfire and even lead to market failure.

Keywords: Boundedly rational expectations; Two-sided search; Matching; Dating; Marriage market; Coarse reasoning (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-dge and nep-mic
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Citations: View citations in EconPapers (2)

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