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Matching with Recall

Bramoullé, Yann, Brian Rogers and Erdem Yenerdag
Authors registered in the RePEc Author Service: Yann Bramoullé

No 17048, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study a two-period one-to-one dynamic matching environment in which agents meet randomly and decide whether to match early or defer. Crucially, agents can match with either partner in the second period. This ``recall’’ captures situations where, e.g., a firm and worker can conduct additional interviews before contracting. Recall has a profound impact on incentives and on aggregate outcomes. We show that the likelihood to match early is non-monotonic in type: early matches occur between the good-but-not-best agents. The option value provided by the first-period partner provides a force against unraveling, so that deferrals occur under small participation costs.

Date: 2022-02
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