Costly Interviews

Josephson, Jens and Shapiro, Joel (2016) Costly Interviews. International Journal of Industrial Organization, 45. pp. 10-15.

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In this paper, we show how the interaction between costly screening and competition in decentralized markets may prevent efficient matching. We examine this phenomenon in a simple dynamic model of a professional labor market, where firms can pay a cost to interview applicants who have private information about their own ability. Inefficiencies arise when a firm decides not to interview potentially able candidates since it infers that sufficiently good candidates will be hired by more productive firms. This effect is robust to changes in the information structure of the market, but it can be mitigated by subsidizing screening costs.

Item Type: Article
Keywords: finance, recruiting, interview costs, asymmetric information, professional labor markets
Subject(s): Finance
Date Deposited: 25 Sep 2015 15:14
Date of author-version deposit: 7 January 2016
Last Modified: 05 Jun 2018 14:19
Funders: N/A

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