Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308308 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17449
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We develop a model in which large risk-neutral firms and individual risk-averse consumers compete to employ heterogeneous workers by posting compensation menus. Production takes time, and we analyze how screening motives interact with the desire to smooth consumption. There is a unique symmetric separating equilibrium that is also efficient. In equilibrium, the extent to which the compensation scheme delays payment until the production quality becomes known depends on whether, and to which extent, the consumers are financially constrained. We discuss how our model relates to the design of compensation schemes in current online peer-to-peer markets.
Subjects: 
adverse selection
self selection
peer-to-peer markets
labor markets
capital market imperfections
JEL: 
D15
D82
D86
E24
J33
M52
Document Type: 
Working Paper

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