Assortative matching through signals

Friedrich Poeschel

No 2013-044, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: When agents do not know where to find a match, they search. However, agents could direct their search to agents who strategically choose a certain signal. Introducing cheap talk to a model of sequential search with bargaining, we find that signals will be truthful if there are mild complementarities in match production: supermodularity of the match production function is a necessary and sufficient condition. It simultaneously ensures perfect positive assortative matching, so that single-crossing property and sorting condition coincide. As the information from signals allows agents to avoid all unnecessary search, this search model exhibits nearly unconstrained efficiency.

Keywords: assortative matching; sorting; search; signals; information (search for similar items in EconPapers)
JEL-codes: C78 D83 J64 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Assortative matching through signals (2013)
Working Paper: Assortative matching through signals (2012)
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