Abstract
A matching market often requires recruiting agents, or ‘programmes’, to costly screen ‘applicants’, and congestion increases with the number of applicants to be screened. We investigate the role of application costs: higher costs reduce congestion by discouraging applicants from applying to certain programmes; however, they may harm match quality. In a multiple-elicitation experiment conducted in a real-life matching market, we implement variants of the Gale-Shapley deferred-acceptance mechanism with different application costs. Our experimental and structural estimates show that a (low) application cost effectively reduces congestion without harming match quality.
Keywords
Gale-Shapley Deferred Acceptance Mechanism; Costly Preference Formation; Screening; Stable Matching; Congestion; Matching Market Design;
JEL codes
- C78: Bargaining Theory • Matching Theory
- D47: Market Design
- D50: General
- D61: Allocative Efficiency • Cost–Benefit Analysis
- I21: Analysis of Education
Replaces
Yinghua He, and Thierry Magnac, “Application Costs and Congestion in Matching Markets”, TSE Working Paper, n. 17-870, December 2017, revised February 2019.
Reference
Yinghua He, and Thierry Magnac, “Application Costs and Congestion in Matching Markets”, The Economic Journal, vol. 132, n. 648, November 2022, p. 2918–2950.
See also
Published in
The Economic Journal, vol. 132, n. 648, November 2022, p. 2918–2950