American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Information Frictions and Employee Sorting between Start-Ups
American Economic Journal: Applied Economics
(pp. 369–406)
Abstract
Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based start-ups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all start-ups' science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds, restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms' right-tail outcomes. Despite these benefits, workers make posttreatment bets indicating highly overoptimistic beliefs about start-up success, suggesting a problem of broader informational deficits.Citation
Bryan, Kevin A., Mitchell Hoffman, and Amir Sariri. 2026. "Information Frictions and Employee Sorting between Start-Ups." American Economic Journal: Applied Economics 18 (2): 369–406. DOI: 10.1257/app.20240722Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- M13 New Firms; Startups
- M51 Personnel Economics: Firm Employment Decisions; Promotions