Pre-match investment with frictions
The paper explores an environment in which agents are motivated to make unproductive investments with the sole aim of improving their matching opportunities. In contrast to existing work, I add frictions by allowing the investment to be imperfectly observed. The analysis allows for a deeper understanding of the trade-off inherent in related models: investments waste resources but facilitates more efficient matching patterns. I show that greater frictions i) do not always lead to inferior matching patterns, and ii) can force the economy into to a Pareto preferred equilibrium.
Year of publication: |
2010
|
---|---|
Authors: | Bidner, Chris |
Published in: |
Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 68.2010, 1, p. 23-34
|
Publisher: |
Elsevier |
Subject: | Matching Frictions Premarital investment Signaling |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
A spillover-based theory of credentialism
Bidner, Chris, (2010)
-
Peer effects and the promise of social mobility a model of human capital investment
Bidner, Chris, (2010)
-
Pre-match investment with frictions
Bidner, Chris, (2010)
- More ...