Deadlines, Offer Timing, and the Search for Alternatives

In “Deadlines, Timing, and the Search for Alternatives,” S. Zorc and I. Tsetlin consider decentralized matching markets like the job market for MBAs. They show that exploding offers (ones with a very short deadline) are often optimal. The benefit of those offers is to prevent the other party’s search for alternatives. However, the main argument in favor of longer deadlines is that people who already hold an offer become more selective when deciding whether to accept other alternatives (the acceptance deterrence effect). Thus, the goal of curtailing search can also be accomplished through increasing the other party’s selectivity instead of preventing them from searching altogether. A practical prescription for offer makers is to use exploding offers when acceptance deterrence is weak (e.g., when the other party’s alternatives will not change) and longer deadlines when it is strong (e.g., when you are able to react to the other party’s other offers).