In Simple Words
Imagine a gold prospector who stops digging after one shovel stroke because getting up each day feels burdensome, even though every shovel stroke yields the exact same amount of gold and no other prospector is nearby to compete. The decision to stop digging represents a behavioral failure rather than an optimal economic trade-off.
Job applications on a Lahore platform
- Applications without calls
- 6.29% received an interview invitation
- Extra applications caused by calls
- 5.87% estimated interview chance
Call-induced return estimated using random assignment: 95% interval 4.9%–6.9%; difference not significant. Inefficient search remains a possibility.
See source →Research question
In classical search models, low application rates are assumed to reflect optimal individual choices where candidates balance search costs against diminishing marginal returns. If marginal search returns do not diminish and do not create negative market spillovers, private application levels are inefficiently low.
Participants
N = 9,838 jobseekers (1,116,952 matches) and 1,340 employer vacancies in Lahore, Pakistan.
Study Design
Policy inference synthesizing a 600% application increase from default initiation, constant 2SLS interview yields (5.87% vs 6.29%), and near-zero spillover coefficients (p = 0.589 and p = 0.511).
Results
Reducing initiation costs increased application volume 7-fold and interview volume 7-fold without reducing interview yields per application (p = 0.647) or creating crowd-out on control applicants (p = 0.589), demonstrating that baseline job search effort is suboptimally low due to initiation frictions.
Takeaway
Implement active platform outreach and default opt-in application policies across public employment services to correct systematic under-searching without fear of depressing match returns.