Matching information

Hector Chade, Jan Eeckhout

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

We analyze the optimal allocation of experts to teams, where experts differ in the precision of their information, and study the assortative matching properties of the resulting assignment. The main insight is that in general it is optimal to diversify the composition of the teams, ruling out positive assortative matching. This diversification leads to negative assortative matching when teams consist of pairs of experts. And when experts' signals are conditionally independent, all teams have similar precision. We also show that if we allow experts to join multiple teams, then it is optimal to allocate them equally across all teams. Finally, we analyze how to endogenize the size of the teams, and we extend the model by introducing heterogeneous firms in which the teams operate.

Original languageEnglish (US)
Pages (from-to)377-414
Number of pages38
JournalTheoretical Economics
Volume13
Issue number1
DOIs
StatePublished - Jan 2018

Keywords

  • Assortative matching
  • correlation
  • diversification
  • teams

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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