Information Frictions and Employee Sorting between Start-Ups

Kevin A. Bryan, Mitchell Hoffman and Amir Sariri

American Economic Journal: Applied Economics, 2026, vol. 18, issue 2, 369-406

Abstract: Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based start-ups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all start-ups' science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds, restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms' right-tail outcomes. Despite these benefits, workers make posttreatment bets indicating highly overoptimistic beliefs about start-up success, suggesting a problem of broader informational deficits.

JEL-codes: D22 D83 J22 J23 J24 M13 M51 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/app.20240722

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