Unraveling Results from Comparable Demand and Supply: An Experimental Investigation

47 Pages Posted: 1 Jun 2009 Last revised: 4 Jul 2010

See all articles by Muriel Niederle

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 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.

Suggested Citation

Niederle, Muriel and Roth, Alvin E. and Unver, Utku, Unraveling Results from Comparable Demand and Supply: An Experimental Investigation (May 2009). NBER Working Paper No. w15006. Available at SSRN: https://ssrn.com/abstract=1412018

Muriel Niederle (Contact Author)

Stanford University - Department of Economics ( email )

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Alvin E. Roth

HBS Negotiations, Organizations and Markets Unit ( email )

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National Bureau of Economic Research (NBER)

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Utku Unver

Boston College, Department of Economics ( email )

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United States
6175640771 (Phone)
+1 (617) 552 2318 (Fax)

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

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