JOB SEARCH WITH BIDDER MEMORIES* |
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| Authors: | Carlos Carrillo‐Tudela Guido Menzio Eric Smith |
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| Affiliation: | 1. University of Essex, U.K.;2. University of Pennsylvania, U.S.A.;3. University of Essex, U.K., Federal Reserve Bank of Atlanta, U.S.A. |
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| Abstract: | This article 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. |
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