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Information Frictions and Employee Sorting Between Startups

Author

Listed:
  • Kevin A. Bryan
  • Mitchell Hoffman
  • Amir Sariri

Abstract

Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based startups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all startups’ science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms’ right-tail outcomes. Despite these benefits, workers make post-treatment bets indicating highly overoptimistic beliefs about startup success, suggesting a problem of broader informational deficits.

Suggested Citation

  • Kevin A. Bryan & Mitchell Hoffman & Amir Sariri, 2022. "Information Frictions and Employee Sorting Between Startups," NBER Working Papers 30449, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30449
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    More about this item

    JEL classification:

    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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