Adverse selection and unraveling in common-value labor markets

, C. () and , ()
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, C.: Department of Economics, Northwestern University
,: Department of Economics, Northwestern University
Authors registered in the RePEc Author Service: Ron Siegel and Jeffrey Ely

Theoretical Economics, 2013, vol. 8, issue 3

Abstract: We investigate a common-value labor setting in which firms interview a worker prior to hiring. When firms have private information about the worker’s value and interview decisions are kept private, many firms may enter the market, interview, and hire with positive probability. When firms’ interview decisions are revealed, severe adverse selection arises. As a result, all firms except for the highest-ranked firm are excluded from the hiring process.

Keywords: Adverse selection; unraveling; interviews (search for similar items in EconPapers)
JEL-codes: D02 D82 J44 (search for similar items in EconPapers)
Date: 2013-09-18
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Citations: View citations in EconPapers (5)

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