The Collapse of a Medical Clearinghouse (and Why Such Failures are Rare)

42 Pages Posted: 2 Feb 2003 Last revised: 21 Jun 2009

See all articles by C. Nicholas McKinney

C. Nicholas McKinney

Harvard University - Business School (HBS)

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)

Date Written: February 2003

Abstract

The collapse of the clearinghouse for the entry-level gastroenterology labor market offers a unique opportunity to study how stable clearinghouses succeed and fail. To explore the reasons for the failure of the clearinghouse (and why failures of this kind of clearinghouse have been so rare), we conduct an experimental investigation of demand shocks of the kind that occurred in the gastroenterology market. We find that a reduction in demand for positions leads to the collapse of the match only when it is detectable by firms before being detected by workers (as in the unexpected shock that took place in 1996, which could be seen by firms in their reduced applicant pools). Simple demand and supply imbalances do not seem to interfere with the operation of the centralized match. Our results suggest an affirmative answer to the question posed by market participants about whether the clearinghouse could be successfully restarted, and that this would relieve some of the distress now reported in that market, by allowing it to operate later, at a more uniform time, and with more national scope.

Suggested Citation

McKinney, C. Nicholas and Niederle, Muriel and Roth, Alvin E., The Collapse of a Medical Clearinghouse (and Why Such Failures are Rare) (February 2003). NBER Working Paper No. w9467. Available at SSRN: https://ssrn.com/abstract=375319

C. Nicholas McKinney

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

HOME PAGE: http://www.people.hbs.edu/nmckinney

Muriel Niederle (Contact Author)

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

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