The Role of Common and Private Signals in Two-Sided Matching with Interviews

Abstract

We study two-sided matching markets where the matching is preceded by a costly interviewing stage in which firms acquire information about the qualities of candidates. Our focus is on the impact of the signals of quality available prior to the interviewing stage. Using a mixture of simulation, numerical, and empirical game theoretic analysis, we show that more commonality in the quality signals can be harmful, yielding fewer matches as some firms make the same mistakes in choosing whom to interview. Relatively high and medium quality candidates are most likely to suffer lower match probabilities. The effect can be mitigated when firms use “more rational” interviewing strategies, or through the availability of private signals of candidate quality to the firms.