Application Costs and Congestion in Matching Markets
Résumé
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.
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