RECRUITING SEASON BEGINS IN EARNEST. The American Economic Association has a new signaling system for job applicants.

Applicants can only send two signals, so if an employer doesn’t get a signal from some applicant, that fact contains almost no information. (See advice to applicants, below, which suggests how applicants might use their signals). But because applicants can send only two signals, the signals an employer does receive convey valuable information about the candidate’s interest.

The instructions for using this system are, well, instructive.

The two signals should not be thought of as indicating your top two choices. Instead, you should think about which two employers that you are interested in would be likely to interview you if they receive your signal, but not otherwise (see advice to employers, above). You might therefore want to send a signal to an employer that you like but that might otherwise doubt whether they are likely to be able to hire you. Or, you might want to send a signal to an employer that you think might be getting many applications from candidates somewhat similar to you, and a signal of your particular interest would help them to break ties. You might send your signals to employers to whom you don’t have other good ways of signaling your interest.

Professor Mankiw has additional impressions, including designer notes from Harvard's Alvin Roth, who was involved in implementing the system.

If you wanted to give a very toy model of why signaling might be useful, you might want to start with the two-firm, two-applicant example in which on one even cares who works for whom, but each firm has only one interview slot, and can only hire someone they have interviewed. Then the symmetric equilibrium involves randomization (each firm randomly chooses one applicant to interview), and there is coordination failure half the time (when both firms interview the same applicant, so only one hire is accomplished). But if applicants can first send one signal, then even if they randomize to whom they send the signal (since they don't care in this simple example), then coordination failure is cut in half, if each firm adopts the strategy of interviewing the applicant whose signal they get in case they get exactly one signal. (Now, coordination failure is only a possibility when both applicants signal the same firm, in which case both firms randomly choose who to interview, which is the situation that existed in the absence of any signal...)