We study a model of two-sided search in which agents' strategic reasoning is coarse. In equilibrium, the most desirable agents behave as if they were fully rational, while for all other agents, coarse reasoning results in overoptimism with regard to their prospects in the market. Consequently, they search longer than is optimal. Moreover, agents with intermediate match values may search indefinitely while all other agents eventually marry. We show that the share of eternal singles converges monotonically to one as search frictions vanish. Thus, improvements in search technology may backfire and even lead to market failure.
Antler, Yair, and Benjamin Bachi.
"Searching Forever After."
American Economic Journal: Microeconomics,
Bargaining Theory; Matching Theory
Consumer Economics: Theory
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Marriage; Marital Dissolution; Family Structure; Domestic Abuse