Signaling preferences in matching markets

Preference Signaling in Matching Markets, by Peter Coles, Alexey Kushnir, and Muriel Niederle, NBER Working Paper No. 16185, July 2010. (Here's an ungated version.)

"Abstract: Many labor markets share three stylized facts: employers cannot give full attention to all candidates, candidates are ready to provide information about their preferences for particular employers, and employers value and are prepared to act on this information. In this paper we study how a signaling mechanism, where each worker can send a signal of interest to one employer, facilitates matches in such markets. We find that introducing a signaling mechanism increases the welfare of workers and the number of matches, while the change in firm welfare is ambiguous. A signaling mechanism adds the most value for balanced markets."

Two of the three authors of this paper are on the AEA job market committee that instituted the AEA's job market signaling mechanism. This new working paper brings some theory to the party.

See also

Peter Coles, John Cawley, Phillip B. Levine, Muriel Niederle, Alvin E. Roth, and John J. Siegfried , " The Job Market for New Economists: A Market Design Perspective," revised April 6, 2010, forthcoming in Journal of Economic Perspectives, Summer 2010.