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Information Frictions and Employee Sorting between Start-ups

Kevin A. Bryan et al.

American Economic Journal: Applied Economics2026https://doi.org/10.1257/app.20240722article
AJG 4ABDC A*
Weight
0.50

Abstract

Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based start-ups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all start-ups' science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds, restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms' right-tail outcomes. Despite these benefits, workers make posttreatment bets indicating highly overoptimistic beliefs about start-up success, suggesting a problem of broader informational deficits. (JEL D22, D83, J22, J23, J24, M13, M51)

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https://doi.org/https://doi.org/10.1257/app.20240722

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@article{kevin2026,
  title        = {{Information Frictions and Employee Sorting between Start-ups}},
  author       = {Kevin A. Bryan et al.},
  journal      = {American Economic Journal: Applied Economics},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1257/app.20240722},
}

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Information Frictions and Employee Sorting between Start-ups

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.