Two-Sided Matching Agents for Electronic Employment Market Design: Social Welfare Implications

Abstract

Abstract : Most e-commerce research addresses product and service markets, but the design of equally important employment markets has been largely neglected in the management literature. This technical report builds upon multidisciplinary research in labor market economics and information systems, and it involves an exploratory experiment to assess the performance of five alternative employment market designs. Using a quasi-price measure for comparison and examining social welfare as a basis for assessing market-design alternatives, we provide novel insight into the balance required between technologically enabled efficiency and economically principled effectiveness of markets. Additionally, this experiment addresses labor market economics in an analytically difficult, public-sector context, yet the market designs and associated technologies are quite general, so the experiment also provides insight into private-sector markets as well. Our results point to a Pareto superior increase in total welfare through market design, which can dramatically increase employee morale and retention, and increase overall labor market efficiency.