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The Cambridge-INET Institute

 

Felix Mylius (Cambridge)

"Application Costs in Matching Markets"

Abstract: Congestion can be a severe problem in matching markets. If application costs are low, workers apply to firms even if they are not particularly interested. Firms in turn are overwhelmed with numerous applications that they need to screen. With imperfect information, they might invite uninterested applicants to an interview instead of applicants that would have been a better match. This distortion can lead to substantial mismatch in equilibrium. Increasing application costs can help to address this issue. By discouraging uninterested workers from applying, firms choose more promising candidates. Therefore, under some circumstances, not only firms but also workers are better off with higher application costs, even though the latter need to pay more. Given that the internet has reduced application costs over the last years, my results could yield some important policy implications for platform designers.

When: Monday 7th June 2021 - 1:00pm

Where: Zoom

Reading Group: Theory Workshop

Theme: information