Application Costs and Congestion in Matching Markets

YingHua He and Thierry Magnac

The Economic Journal, 2022, vol. 132, issue 648, 2918-2950

Abstract: A matching market often requires recruiting agents, or ‘programmes’, to costly screen ‘applicants’, and congestion increases with the number of applicants to be screened. We investigate the role of application costs: higher costs reduce congestion by discouraging applicants from applying to certain programmes; however, they may harm match quality. In a multiple-elicitation experiment conducted in a real-life matching market, we implement variants of the Gale-Shapley deferred-acceptance mechanism with different application costs. Our experimental and structural estimates show that a (low) application cost effectively reduces congestion without harming match quality.

Date: 2022
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Related works:
Working Paper: Application Costs and Congestion in Matching Markets (2022)
Working Paper: Application Costs and Congestion in Matching Markets (2020)
Working Paper: Application Costs and Congestion in Matching Markets (2019)
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