Working Paper: CEPR ID: DP17048
Authors: Yann Bramoullé; Brian W. Rogers; Erdem Yenerdag
Abstract: We study a two-period one-to-one dynamic matching environment in which agents meet randomly and decide whether to match early or defer. Crucially, agents can match with either partner in the second period. This ``recall’’ captures situations where, e.g., a firm and worker can conduct additional interviews before contracting. Recall has a profound impact on incentives and on aggregate outcomes. We show that the likelihood to match early is non-monotonic in type: early matches occur between the good-but-not-best agents. The option value provided by the first-period partner provides a force against unraveling, so that deferrals occur under small participation costs.
Keywords: No keywords provided
JEL Codes: C78; D47; D82; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Recall (Y60) | Higher assortativity in matches (C78) |
| Agent type (L85) | Matching decisions (C78) |
| Higher-type agents (L85) | Selectivity in matching decisions (C78) |
| Participation costs (D23) | Matching behavior (with recall) (C92) |
| Expectation of future partner quality (D84) | Current matching behavior (C92) |
| Higher-type agents (L85) | Likelihood of matching early (C78) |