Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists

Journal of Political Economy, Vol. 105, No. 2, April 1997

Posted: 23 Apr 1997

See all articles by Alvin E. Roth

Alvin E. Roth

Dept. of Economics, Stanford University; National Bureau of Economic Research (NBER)

Xiaolin Xing

National University of Singapore (NUS)

Abstract

In the context of entry-level labor markets, we consider the potential transactions that have to be evaluated before equilibrium transactions can be identified. These potential transactions involve offers that are rejected. After an initial phase in which many offers can be proffered in parallel, subsequent potential transactions must be processed serially, since a new offer cannot be made until an outstanding offer is rejected. In this phase even a small time required to process offers and rejections may cause bottlenecks. In many, perhaps most, decentralized labor markets, this means that transactions have to be finalized before there is time for the market to clear, that is, before all the potential transactions that would need to be evaluated in order to reach a stable outcome can in fact be evaluated. This has implications for the strategic behavior of firms and workers. In particular, in deciding to whom to offer a position, a firm may have strong incentives to consider not only its preferences over workers but also the likelihood that its offer will be accepted, since if its offer is rejected it may find that many other potential employees have become unavailable in the interim. The analysis is carried out in connection with the decentralized market for clinical psychologists. The implications for other kinds of markets are considered.

JEL Classification: J41, J44

Suggested Citation

Roth, Alvin E. and Xing, Xiaolin, Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists. Journal of Political Economy, Vol. 105, No. 2, April 1997, Available at SSRN: https://ssrn.com/abstract=3904

Alvin E. Roth (Contact Author)

Dept. of Economics, Stanford University ( email )

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

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Xiaolin Xing

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591

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