Job search with bidder memories

Carlos Carrillo-Tudela, Guido Menzio, Eric Smith

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This article revisits the no-recall assumption in job search models with take-it-or-leave-it offers. Workers who can recall previously encountered potential employers in order to engage them in Bertrand bidding have a distinct advantage over workers without such attachments. Firms account for this difference when hiring a worker. When a worker first meets a firm, the firm offers the worker a sufficient share of the match rents to avoid a bidding war in the future. The pair share the gains to trade. In this case, the Diamond paradox no longer holds.

    Original languageEnglish (US)
    Pages (from-to)639-655
    Number of pages17
    JournalInternational Economic Review
    Volume52
    Issue number3
    DOIs
    StatePublished - Aug 2011

    ASJC Scopus subject areas

    • Economics and Econometrics

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