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Application Costs and Congestion in Matching Markets

Yinghua He and Thierry Magnac ()

No 17-870, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: A matching market often requires recruiting agents, or ``programs,'' 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 programs; 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.

Keywords: Gale-Shapley Deferred Acceptance Mechanism; Costly Preference Formation; Screening; Stable Matching; Congestion; Matching Market Design (search for similar items in EconPapers)
JEL-codes: C78 D47 D50 D61 I21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-des, nep-exp and nep-gth
Date: 2017-12, Revised 2019-02
References: View references in EconPapers View complete reference list from CitEc
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