Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/300048 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11120
Publisher: 
CESifo GmbH, Munich
Abstract: 
A principal often needs to match agents to perform coordinated tasks, but agents can quit or slack off if they dislike their match. We study two prevalent approaches for matching within organizations: Centralized assignment by firm leaders and self-organization through market-like mechanisms. We provide a formal model of the strengths and weaknesses of both methods under different settings, incentives, and production technologies. The model highlights tradeoffs between match-specific productivity and job satisfaction. We then measure these tradeoffs with data from a large organization's internal talent market. Firm-dictated matches are 33% more valuable than randomly assigned matches within job categories (using the firm's preferred metric of quality). By contrast, preference-based matches (using deferred acceptance) are only 5% better than random but are ranked (on average) about 38 percentiles higher by the workforce. The self-organized match is positively assortative and helps workers grow new skills; the firm's preferred match is negatively assortative and harvests existing expertise.
Subjects: 
internal labor markets
assortative matching
assignment mechanisms
team formation
matching
JEL: 
M50
D47
J40
Document Type: 
Working Paper
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