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Monotone Equilibrium Design for Matching Markets with Signaling

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  • Seungjin Han
  • Alex Sam
  • Youngki Shin

Abstract

We study monotone equilibrium design by a planner who chooses an interval of reactions that receivers take before senders and receivers move in matching markets with signaling. Given the convex efficiency frontier over sender surplus and receiver surplus generated by the interval delegation, the optimal reaction interval crucially depends on the ripple effect of its lower bound and on the trade-off between matching inefficiency and signaling cost savings in the top pooling region generated by its upper bound. Our analysis generates cohesive market design results that integrate the literature on minimum wage, firm size distribution, and relative risk aversion.

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  • Seungjin Han & Alex Sam & Youngki Shin, 2024. "Monotone Equilibrium Design for Matching Markets with Signaling," Papers 2406.01886, arXiv.org, revised Jul 2024.
    • Handle: RePEc:arx:papers:2406.01886
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    References listed on IDEAS

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    1. Markus Poschke, 2018. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 1-41, July.
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