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No One Likes to Be Second Choice

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  • Antler, Y

Abstract

A decision maker is interested in appointing one individual from a group of candidates to a public position with an exogenous wage. He must decide in what order to approach them. Candidates who are more valuable to the decision maker are less likely to be available. The candidates' preferences have a social component: each candidate finds the position more attractive if he is highly ranked by the decision maker (relative to the other candidates). However, the decision maker's preferences are his private information. As a result, candidates infer the decision maker's evaluation of them based on the number of candidates who have previously turned him down. The main result is that when the number of candidates is suficiently large, all of the candidates reject the decision maker's offers, including those whom he most values. Moreover, the decision maker's payoff is not monotonic in the number of candidates.

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  • Antler, Y, 2016. "No One Likes to Be Second Choice," Economics Discussion Papers 17510, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:17510
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    References listed on IDEAS

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    1. Gul, Faruk & Pesendorfer, Wolfgang, 2016. "Interdependent preference models as a theory of intentions," Journal of Economic Theory, Elsevier, vol. 165(C), pages 179-208.
    2. Christopher Avery & Jonathan Levin, 2010. "Early Admissions at Selective Colleges," American Economic Review, American Economic Association, vol. 100(5), pages 2125-2156, December.
    3. Yair Antler, 2015. "Two-Sided Matching with Endogenous Preferences," American Economic Journal: Microeconomics, American Economic Association, vol. 7(3), pages 241-258, August.
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