Information Disclosure and Unraveling in Matching Markets

Abstract

This paper explores information disclosure in matching markets, e.g., the informativeness of transcripts given out by universities. We show that the same, benchmark, amount of information is disclosed in essentially all equilibria. We then demonstrate that if universities disclose the benchmark amount of information, students and employers will not find it profitable to contract early; if they disclose more, unraveling will occur.

Keywords: microeconomics, matching, economic theory

JEL Classification: C78