Information Disclosure and Unraveling in Matching Markets
This paper explores information disclosure in matching markets, e.g., the informativeness of transcripts given out by universities. We show that the same, "benchmark," amount of information is disclosed in essentially all equilibria. We then demonstrate that if universities disclose the benchmark amount of information, students and employers will not find it profitable to contract early; if they disclose more, unraveling will occur.
We are grateful to Drew Fudenberg, Kate Ho, Ed Lazear, Muriel Niederle, Al Roth, Andrei Shleifer, Larry Summers, Adam Szeidl, and Robert Wilson for comments and suggestions and to Tomasz Sadzik for research assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Michael Ostrovsky & Michael Schwarz, 2010. "Information Disclosure and Unraveling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 34-63, May. citation courtesy of