Discussion paper

DP15082 Application Costs and Congestion in Matching Markets

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.


He, Y and T Magnac (2020), ‘DP15082 Application Costs and Congestion in Matching Markets‘, CEPR Discussion Paper No. 15082. CEPR Press, Paris & London. https://cepr.org/publications/dp15082