A matching market often requires recruiting agents, or ‘programmes’, 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 programmes; 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.
Gale-Shapley Deferred Acceptance Mechanism; Costly Preference Formation; Screening; Stable Matching; Congestion; Matching Market Design;
- C78: Bargaining Theory • Matching Theory
- D47: Market Design
- D50: General
- D61: Allocative Efficiency • Cost–Benefit Analysis
- I21: Analysis of Education
Yinghua He, and Thierry Magnac, “Application Costs and Congestion in Matching Markets”, TSE Working Paper, n. 17-870, December 2017, revised February 2019.
Yinghua He, and Thierry Magnac, “Application Costs and Congestion in Matching Markets”, The Economic Journal, vol. 132, n. 648, November 2022, p. 2918–2950.
The Economic Journal, vol. 132, n. 648, November 2022, p. 2918–2950