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.

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Citation

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