%0 Report
        %A He, Yinghua
%A Magnac, Thierry
        %T A Pigouvian Approach to Congestion in Matching Markets
        %D 2018
        %8 2018 Nov
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 11967
        %U https://www.iza.org/publications/dp11967
        %X Recruiting agents, or "programs" costly screen “applicants” in matching processes, and congestion in a market increases with the number of applicants to be screened. To combat this externality that applicants impose on programs, application costs can be used as a Pigouvian tax. Higher costs reduce congestion by discouraging applicants from applying to certain programs; however, they may harm match quality. In a multiple-elicitation experiment conducted in a real-life matching market, we implement variants of the Gale-Shapley Deferred-Acceptance mechanism with different application costs. Our experimental and structural estimates show that a (low) application cost effectively reduces congestion without harming match quality.
        %K Gale-Shapley Deferred Acceptance Mechanism
%K costly preference formation
%K screening
%K stable matching
%K congestion
%K matching market place