Preference Signaling in Matching Markets

67 Pages Posted: 12 Jul 2010 Last revised: 23 Sep 2010

See all articles by Peter A. Coles

Peter A. Coles

Airbnb

Alexey I. Kushnir

Carnegie Mellon University - David A. Tepper School of Business

Muriel Niederle

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

Date Written: July 2010

Abstract

Many labor markets share three stylized facts: employers cannot give full attention to all candidates, candidates are ready to provide information about their preferences for particular employers, and employers value and are prepared to act on this information. In this paper we study how a signaling mechanism, where each worker can send a signal of interest to one employer, facilitates matches in such markets. We find that introducing a signaling mechanism increases the welfare of workers and the number of matches, while the change in firm welfare is ambiguous. A signaling mechanism adds the most value for balanced markets.

Suggested Citation

Coles, Peter A. and Kushnir, Alexey I. and Niederle, Muriel, Preference Signaling in Matching Markets (July 2010). NBER Working Paper No. w16185. Available at SSRN: https://ssrn.com/abstract=1636653

Peter A. Coles (Contact Author)

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Alexey I. Kushnir

Carnegie Mellon University - David A. Tepper School of Business ( email )

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Muriel Niederle

Stanford University - Department of Economics ( email )

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Stanford, CA 94305-6072
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National Bureau of Economic Research (NBER) ( email )

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