Harmful signaling in matching markets

Alexey Kushnir ()

Games and Economic Behavior, 2013, vol. 80, issue C, 209-218

Abstract: Several labor markets, including the job market for new Ph.D. economists, have recently developed formal signaling mechanisms. We show that such mechanisms are harmful for some environments. While signals transmit previously unavailable information, they also facilitate information asymmetry that leads to coordination failures. In particular, we consider a two-sided matching game of incomplete information between firms and workers. Each worker has either the same “typical” known preferences with probability close to one or “atypical” idiosyncratic preferences with the complementary probability close to zero. Firms have known preferences over workers. We show that under some technical condition if at least three firms are responsive to some workerʼs signal, the introduction of signaling strictly decreases the expected number of matches.

Keywords: Signaling; Cheap talk; Matching (search for similar items in EconPapers)
JEL-codes: C72 C78 D80 J44 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Harmful Signaling in Matching Markets (2010)
Working Paper: Harmful Signaling in Matching Markets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:80:y:2013:i:c:p:209-218

DOI: 10.1016/j.geb.2013.04.002

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