Working Paper: NBER ID: w30449
Authors: Kevin A. Bryan; Mitchell Hoffman; Amir Sariri
Abstract: Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based startups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all startups’ science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms’ right-tail outcomes. Despite these benefits, workers make post-treatment bets indicating highly overoptimistic beliefs about startup success, suggesting a problem of broader informational deficits.
Keywords: employee sorting; information frictions; startups; job applications; expert ratings
JEL Codes: M50; M51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Expert ratings on firm quality (L15) | Application behavior of workers (J29) |
| Expert ratings on science quality (A14) | Application behavior of workers (J29) |
| Expert ratings (C52) | Worker beliefs about firm success (L20) |
| Worker beliefs about firm success (L20) | Application behavior of workers (J29) |
| Information availability (L15) | Decision-making in labor markets (J29) |