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When employers cannot tell whether a school truly has many good students or whether it is just giving easy grades, schools have an incentive to inflate grades to help their mediocre students. However schools also care about preserving the value of good grades for their good students. We...
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We present a model of delegation with self-interested and privately informed experts. A team of experts with extreme but opposite biases is acceptable to a wide range of decision makers with diverse preferences, but the value of expertise from such a team is low. A decision maker wants to...
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In an assignment market with uncertainty regarding productive ability of participants, early contracting can occur as participants balance risk sharing and sorting efficiency. More promising agents may contract early with each other because insurance gains outweigh sorting inefficiency, whereas...
Persistent link: https://www.econbiz.de/10014147520
In markets for entry-level professionals, the insurance motive drives some participants to sign early contracts. The rush to early contracting can be self-fulfilling, as both its effect on expectations about demand-supply balance in the subsequent spot market and the effect on it from changes in...
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We study how competing matchmakers use prices to sort participants into search markets, where they form random pairwise matches, and how equilibrium outcomes compare with monopoly in terms of prices, search market structure and sorting efficiency. The role of prices to facilitate sorting is...
Persistent link: https://www.econbiz.de/10004970930
This paper considers the problem of a monopoly matchmaker that uses a schedule of entrance fees to sort different types of agents on the two sides of a matching market into exclusive meeting places, where agents randomly form pairwise matches. We make the standard assumption that the match value...
Persistent link: https://www.econbiz.de/10004977975
We consider a two-sided, finite-horizon model of search and matching with heterogeneous types and complementarity between types. The quality of the pool of potential matches deteriorates as agents who have found mutually agreeable matches exit the market. With automatic participation of all...
Persistent link: https://www.econbiz.de/10005027288