Unraveling Results from Comparable Demand and Supply: An Experimental Investigation

37 Pages Posted: 25 May 2009  

Muriel Niederle

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Alvin E. Roth

HBS Negotiations, Organizations and Markets Unit; National Bureau of Economic Research (NBER)

M. Utku Ünver

Boston College - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 19, 2009

Abstract

Markets sometimes unravel, with offers becoming inefficiently early. Often this is attributed to competition arising from an imbalance of demand and supply, typically excess demand for workers. However this presents a puzzle, since unraveling can only occur when firms are willing to make early offers and workers are willing to accept them. We present a model and experiment in which workers' quality becomes known only in the late part of the market. However, in equilibrium, matching can occur (inefficiently) early only when there is comparable demand and supply: a surplus of applicants, but a shortage of high quality applicants.

Keywords: matching, unraveling, experiments, market design, labor demand and supply

JEL Classification: C78, C9, D61

Suggested Citation

Niederle, Muriel and Roth, Alvin E. and Ünver, M. Utku, Unraveling Results from Comparable Demand and Supply: An Experimental Investigation (May 19, 2009). Available at SSRN: https://ssrn.com/abstract=1407246 or http://dx.doi.org/10.2139/ssrn.1407246

Muriel Niederle

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alvin E. Roth

HBS Negotiations, Organizations and Markets Unit ( email )

Soldiers Field
Boston, MA 02163
United States
617-495-5447 (Phone)
617-496-7379 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Utku Unver (Contact Author)

Boston College - Department of Economics ( email )

140 Commonwealth Ave.
Chestnut Hill, MA 02467
United States
+1 (617) 552 2217 (Phone)
+1 (617) 552 2318 (Fax)

HOME PAGE: http://www2.bc.edu/~unver

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