Competition in a Posted-Salary Matching Market under Private Information
- Creators
- Boosey, Luke A.
Abstract
We study a posted-salary labor market in which firms engage in salary competition. Firms' preferences over workers are private information, creating uncertainty about competitive pressure for different workers. We consider a baseline 2-firm, 2-worker model, then extend the analysis to larger markets by replicating the baseline. We characterize the unique Bayesian- Nash equilibrium, in which each firm type chooses a distributional strategy with interval support in the salary space. The main result shows that competition is localized, in the sense that firm types with a common most preferred worker choose non-overlapping, adjacent supports. We also provide numerical results to show that the equilibrium strategies in finite replicated markets converge to the corresponding equilibrium strategies in a market with a continuum of firms and workers.
Additional Information
© 2016 by Walter de Gruyter GmbH. Published online March 24, 2016. I am most grateful to John Ledyard, Federico Echenique, Jean-Laurent Rosenthal, Leeat Yariv, Salvatore Nunnari, Cary Frydman, Sang-Mok Lee, Guilherme Pereira de Freitas, Svetlana Pevnitskaya, and Dmitry Ryvkin for their comments and suggestions. I also thank seminar participants at Caltech, the Canadian Economic Theory Conference (2011), and North American Econometric Society Summer Meeting (2011). Any remaining errors are mine.Attached Files
Published - Competition_in_a_Posted-Salary_Matching_Market_under_Private_Information.pdf
Submitted - PostedSalaryMatching_DGsubmission.pdf
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Additional details
- Eprint ID
- 72550
- Resolver ID
- CaltechAUTHORS:20161205-101550505
- Created
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2016-12-06Created from EPrint's datestamp field
- Updated
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2021-11-11Created from EPrint's last_modified field