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Application Costs and Congestion in Matching Markets

He, Yinghua and Magnac, Thierry (2017) Application Costs and Congestion in Matching Markets. TSE Working Paper, n. 17-870, Toulouse

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A matching market often requires recruiting agents, or ``programs,'' 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 programs; 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.

Item Type: Monograph (Working Paper)
Language: English
Date: December 2017
Place of Publication: Toulouse
Uncontrolled Keywords: Gale-Shapley Deferred Acceptance Mechanism, Costly Preference Formation, Screening, Stable Matching, Congestion, Matching Market Design
JEL Classification: C78 - Bargaining Theory; Matching Theory
D50 - General
D61 - Allocative Efficiency; Cost-Benefit Analysis
I21 - Analysis of Education
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 17 Apr 2018 08:04
Last Modified: 23 May 2019 12:47
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