Preference Signaling in Matching Markets

Coles, Peter A.; Kushnir, Alexey; Niederle, Muriel

doi:10.3386/w16185

Cited by 25 publications

(27 citation statements)

References 33 publications

(4 reference statements)

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“…Theorem 2 also brings to mind the welfare result in [4], in which signaling equilibria with varying cutoffs are compared. In each of these settings, actions by one side of the market -signaling by women in [4], capacity reduction in [14] and [16], and truncation in this paper -serve to "shift the balance of power." When there are equilibria with varying degrees of action, the sides of the market are at odds over which equilibrium is preferred, and whether any action is desirable at all.…”

Section: Theorem 2 Letmentioning

confidence: 99%

“…He shows that when all agents report truthfully, the proportion of participants who can achieve a significant utility gain from manipulation vanishes as the market grows large. 4 Our approach takes a different tack. We do not require preference lists to be short, and ask: in markets that do not satisfy non-manipulability conditions, how should players optimally misrepresent preferences?…”

Section: Introductionmentioning

confidence: 99%

“…Lee and Schwarz [17] consider a setting where information acquisition is costly, so that firms prefer to interview workers who have a high likelihood of accepting (and likelihood is based on the number and identity of other firms interviewing a worker). Coles, Kushnir and Niederle [4] consider a setting where workers can signal their preferences to firms, so that firms may choose not to make offers to better-ranked candidates, and instead make offers to candidates who have indicated likeliness to accept. In our paper, the analysis is performed after any costly information gathering has taken place, so these considerations do not arise.…”

Section: Introductionmentioning

confidence: 99%

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Optimal Truncation in Matching Markets

Coles¹,

Shorrer

2013

SSRN Journal

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Since no stable matching mechanism can induce truth-telling as a dominant strategy for all participants, there is often room in matching markets for strategic misrepresentation (Roth [25]). In this paper we study a natural form of strategic misrepresentation: reporting a truncation of one's true preference list. Roth and Rothblum [28] prove an important but abstract result: in certain symmetric, incomplete information settings, agents on one side of the market ("the women") optimally submit some truncation of their true preference lists. In this paper we put structure on this truncation, both in symmetric and general settings, when agents must submit preference lists to the Men-Proposing Deferred Acceptance Algorithm.We first characterize each woman's truncation payoffs in an incomplete information setting in terms of the distribution of her achievable mates. The optimal degree of truncation can be substantial: we prove that in a uniform setting, the optimal degree of truncation for an individual woman goes to 100% of her list as the market size grows large, when other women are truthful. In this setting, we demonstrate the existence of an equilibrium where all agents use truncation strategies. Compared to truthful reporting, in any equilibrium in truncation strategies, welfare diverges for men and women: women prefer the truncation equilibrium, while men would prefer that participants truthfully report.In a general environment, we show that the less risk averse a player, the greater the degree of her optimal truncation. Finally, when correlation in preferences increases, players should truncate less. While several recent papers have focused on the limits of strategic manipulation, our results serve as a reminder that without the pre-conditions ensuring truthful reporting, even in settings where agents have little information, the potential for manipulation can be significant.

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Section: Theorem 2 Letmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Optimal Truncation in Matching Markets

Coles¹,

Shorrer

2013

SSRN Journal

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“…Coles, Kushnir and Niederle (2013) consider settings where workers initially know their preferences over firms, and examine mechanisms which allow them to signal to firms prior to the assignment of interviews in decentralized labor markets; they find that allowing for signaling can improve employment and worker welfare.…”

Section: Introductionmentioning

confidence: 99%

Interviewing in Two-Sided Matching Markets

Lee

Schwarz

2009

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We introduce the interview assignment problem, which generalizes the one-to-one matching model of Gale and Shapley (1962) by introducing a stage of costly information acquisition. Firms learn preferences over workers via costly interviews. Even if all firms and workers conduct the same number of interviews, realized unemployment depends also on the extent to which agents share common interviewing partners. We introduce the concept of overlap that captures this notion, and prove that unemployment is minimized with perfect overlap: i.e., if two firms interview any common worker, they interview the exact same set of workers.

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“…It will become clear later that f 0 > w 0 + n for every …nite n in our model. 14 See Lee and Schwarz (2007), and Coles and Niederle (2007). 15 In early periods information is transferred only through connections.…”

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confidence: 99%

Social networks and unraveling in labor markets

Fainmesser¹

2013

Journal of Economic Theory

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This paper develops a model of local unraveling (or early hiring) in entry-level labor markets. Information about workers'productivity is revealed over time and transmitted credibly via a two-sided network connecting …rms and workers. While employment starts only after workers …nish their formal training, …rms and workers can sign an enforceable future employment contract at any time. We …nd that increasing e¢ ciency in the postgraduation market may increase unraveling. A thorough analysis shows that unraveling increases in the span of network, in network concentration around a subset of workers, and in early information accuracy. Unraveling decreases in network concentration around a subset of …rms. Network density increases unraveling when the network is sparse, but decreases unraveling in dense networks. The model also predicts more unraveling by workers that are connected to …rms of di¤erent qualities and by …rms that are connected to less workers. Finally, we analyze the e¤ects of unraveling on market outcomes and welfare and evaluate di¤erent policies with respect to their e¤ect on unraveling. Our model provides predictions are consistent with evidence from various markets, and suggest future theoretical and empirical work. (JEL: A14, D40, D85, C78, J44, L14)

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Preference Signaling in Matching Markets

Cited by 25 publications

References 33 publications

Optimal Truncation in Matching Markets

Optimal Truncation in Matching Markets

Interviewing in Two-Sided Matching Markets

Social networks and unraveling in labor markets

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