Many labor markets share three stylized facts: employers cannot
give full attention to all candidates, candidates are ready to provide
information about their preferences for particular employers, and
employers value and are prepared to act on this information. In this
paper we study how a signaling mechanism, where each worker can
send a signal of interest to one employer, facilitates matches in such
markets. We find that introducing a signaling mechanism increases
the welfare of workers and the number of matches, while the change
in firm welfare is ambiguous. A signaling mechanism adds the most
value for balanced markets. (JEL C78)
Coles, Peter, Alexey Kushnir, and Muriel Niederle.
"Preference Signaling in Matching Markets."
American Economic Journal: Microeconomics,
Bargaining Theory; Matching Theory