The Role of Common and Private Signals in Two-Sided Matching with Interviews

We study two-sided matching markets where the matching is preceded by a costly interviewing stage in which firms acquire information about the qualities of candidates. Our focus is on the impact of the signals of quality available prior to the interviewing stage. Equilibrium interviewing decisions are hard to characterize in complex models with di↵erentiated quality, so we use a mixture of simulation, numerical, and empirical game theoretic analysis to analyze social outcomes. We show that more commonality in the quality signals can be harmful, yielding fewer matches as some firms make the same mistakes in choosing whom to interview. Relatively high and medium quality candidates are most likely to su↵er lower match probabilities. The e↵ect can be mitigated when firms use “more rational” interviewing strategies, or through the availability of private signals of candidate quality to the firms.