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Job Search with Bidder Memories

2009; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.1442614

1556-5068

Carlos Carrillo‐Tudela, Guido Menzio, Eric Smith,

Distributed and Parallel Computing Systems

This paper revisits the no-recall assumption in job search models with take-it-or-leave-it offers. Workers who can recall previously encountered potential employers in order to engage them in Bertrand bidding have a distinct advantage over workers without such attachments. Firms account for this difference when hiring a worker. When a worker first meets a firm, the firm offers the worker a sufficient share of the match rents to avoid a bidding war in the future. The pair share the gains to trade. In this case, the Diamond paradox no longer holds.