TY - JOUR
T1 - Searching Forever After
AU - Antler, Yair
AU - Bachi, Benjamin
N1 - Publisher Copyright:
© 2022. American Economic Journal: Microeconomics.All Rights Reserved
PY - 2022
Y1 - 2022
N2 - We study a model of two-sided search in which agents’ strategic reasoning is coarse. In equilibrium, the most desirable agents behave as if they were fully rational, while for all other agents, coarse reasoning results in overoptimism with regard to their prospects in the market. Consequently, they search longer than is optimal. Moreover, agents with intermediate match values may search indefinitely while all other agents eventually marry. We show that the share of eternal singles converges monotonically to one as search frictions vanish. Thus, improvements in search technology may backfire and even lead to market failure.
AB - We study a model of two-sided search in which agents’ strategic reasoning is coarse. In equilibrium, the most desirable agents behave as if they were fully rational, while for all other agents, coarse reasoning results in overoptimism with regard to their prospects in the market. Consequently, they search longer than is optimal. Moreover, agents with intermediate match values may search indefinitely while all other agents eventually marry. We show that the share of eternal singles converges monotonically to one as search frictions vanish. Thus, improvements in search technology may backfire and even lead to market failure.
UR - http://www.scopus.com/inward/record.url?scp=85135414451&partnerID=8YFLogxK
U2 - 10.1257/mic.20200020
DO - 10.1257/mic.20200020
M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???
AN - SCOPUS:85135414451
SN - 1945-7669
VL - 14
SP - 558
EP - 590
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 3
ER -