The encyclopedia · R&D & Science · Technical decision · 2006–2010
Economists got a way to signal real interest without cheap talk
Since November 2006, PhD economists can send two signals of interest before interviews; about 1,000 candidates a year use it.
American Economic Association
the move
In the market for new PhD economists, thousands of candidates apply to hundreds of employers, and interviews happen at one January meeting. Employers cannot read every file, and good candidates get passed over when a school assumes they would never come.
The AEA's Ad Hoc Committee on the Job Market, chaired by Alvin Roth, proposed a signaling mechanism: from November 2006, each candidate may send an expression of special interest to up to two employers through an AEA website. Signals are not made public.
The limit of two is the whole trick: because a signal costs a candidate one of two chances, it credibly means "you are special", unlike the cheap talk of an email that could have gone to everyone. About 1,000 candidates a year used it from 2006 to 2009, almost all sending two signals.
Survey evidence suggested the mechanism helped: departments reported students were often declined interviews because they looked like unreachable long-shots, and signals gave such candidates a way to say "no, I really would come".
why it works
- A capped signal carries information precisely because it is scarce.
- It is equitable: every candidate gets the same two signals, regardless of advisor connections.
- Employers get a low-cost way to break ties and fill interview slots with candidates who want them.
what transfers
Scarcity creates credibility. When everyone can shout, shouts mean nothing; the AEA gave each candidate exactly two signals, so an employer knows a signal cost something and means real interest.
what came after
Signaling became a fixture of the economics job market and a standard example in market design, later studied as a general fix for coordination failure in centralized matching markets.
references
- The Job Market for New Economists: A Market Design Perspective (author copy, Journal of Economic Perspectives 24(4))
- Signaling for Interviews in the Economics Job Market
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