Job market interviewing entails a massive duplication of effort. You interview with each of your potential employers individually imposing costs on them and on you. Even in the economics PhD job market, a famously efficient matching process, we go through a ridiculous merry-go-round of interviews over an entire weekend. Each candidate gives essentially the same 30 minute spiel to 20 different recruiting committees.
What if we assigned a single committee to interview every candidate and webcast it to any potentially interested employer? Most recruiting chairs would applaud this but candidates would hate it. Both are forgetting some basic information economics.
Candidates hate this idea because with only one interview, a bad performance would ruin their job market. With many interviews there are certain to be at least a few that go smoothly. But of course there is a flip-side to both of these. If the one interview goes very well, they will have a great outcome. With many interviews there are certain to be a few that go badly. How do these add up?
Auction theory gives a clear answer. Let’s rate the quality of an interview in terms of the wage it leads your employer to be willing to pay. Suppose there are two employers and you give them separate interviews. Competitive bidding will drive the wage up until one of them drops out. That will be the lower of the two employer’s willingness to pay.
On the other hand, if both employers saw the outcome of the same interview, then both would have the same willingness to pay equal to the quality of that one interview. On average the quality of one draw from a distribution is strictly larger than the minimum of two draws from the same distribution. You get a higher wage on average with a single interview.
What’s going on here is that the private information generated by separate interviews gives each employer some market power, so-called information rents. By pooling the information you put the employers on equal footing and they compete away all of the gains from employment, to your benefit.
In fact, pooling interviews is even better than this argument suggests due to another basic principle of information economics: the winner’s curse. When interviews are separate, each employe
rs’ willingness to pay is based on the quality of the interview and whatever he believes was the quality of the other interview. Both interviews are informative signals of your talent. Without knowing the quality of the other interview, when bidding for your labor each employer worries that he might win the bidding only because you tanked the other interview. Since this would be bad news for the winner (hence the curse), each bidder bids conservatively in order to avoid overpaying in such a situation. Your wage suffers.
By pooling interviews you pool the information and take away any doubts of this form. Without the winner’s curse, employers can safely bid aggressively for you.
Going back to the original intuition, its true there are upsides and downsides of having separate interviews but the mechanics of competition magnify the downsides through both of these channels, so in the end separate interiews leads to a lower wage on average than if they were pooled.
Perhaps this explains why, despite their grumblings, economics department recruiters are still willing to spend 18 hours locked in a windowless hotel room conducting interviews.
Addendum: A commenter asked about competition by more than two employers. If six are bidding for you, then eventually the wage has been bid up until four have dropped out of the competition. The price at which they drop out reveals their information to the two remaining competitors. At that point the two-bidder argument applies.
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February 10, 2010 at 1:30 am
Chris
I am not sure about the wage argument: True the minimum of two draws is lower (on average) than the outcome of one draw. But the second highest draw from, say, 6 draws is probably higher than the average one draw outcome.
February 10, 2010 at 8:07 am
Joseph
Candidates hate this because of the risk. consider this exposition:
There is a 50% chance you will have a great interview, and a 50% chance that you will have a terrible interview. With a great interview, you will get hired for sure; with a terrible interview you will not get hired.
If you put all your eggs in one basket, then there is a full 50% chance that you will not get hired. By spreading out over n interviews, however, your chances of being shut out are only .5^n.
Mild risk aversion could easily overwhelm the wage effect, which decreases as n grows.
A secondary complaint is that interviews probably improve with experience due to practice/familiarity/nerves or the like. Hence, candidates will hate the single interview method because they will on average do worse on this interview than most of their interviews in the separate case.
February 10, 2010 at 11:42 am
Sean
Most rookie salaries in econ are non-negotiable. Maybe a superstar deciding between offers at Harvard, MIT, and Stanford has some leverage, but of the dozen-plus offers I’ve seen at research departments outside of the top 10, not one was more than marginally negotiable on salary. A rookie might be able to negotiate a little on teaching and research support. But even such cases, compensation/benefits are often not at the discretion of the department. The department would like to hire the best people and is willing to spend as much of the dean’s money as it can, so it’s not as if the people doing the hiring have much of anything to lose even if the candidate is able to exercise a little leverage. In fact, there’s a sense in which a department would like every offer to be the maximum possible, so its present members can try to leverage these high offers into more money for themselves down the line. Jeff’s argument would make much more sense for a self-funded department, in which a dollar spent on a new hire would result in a dollar less to redistribute within the department.
February 10, 2010 at 8:19 pm
Lones Smith
My good friend Hector Chade wrote the definitive (first) paper relevant to your thoughts here in 2006: “Matching with noise and the acceptance curse”. The moment any non MIT/Princeton/Harvard (NWU?) school sees someone accept their junior offer, their immediate gut feeling is often “uh oh, not so good”. 🙂
February 11, 2010 at 8:53 am
Noah Yetter
“On the other hand, if both employers saw the outcome of the same interview, then both would have the same willingness to pay equal to the quality of that one interview.”
Your case seems to rest on this demonstrably false assumption. Interview quality determines the binary hiring decision, but often has little influence on salary which is largely determined in advance.
The real justification for multiple interviews is heterogeneity among employers. I expect that’s not at the front of your mind since it’s not a big factor for PhD’s seeking jobs at universities, but it is for basically everyone else. A single interview could not be conducted by one party and broadcast to employers, because each employer wants to ask (often radically) different questions, to discover how well-tailored you are to their particular needs.
December 21, 2010 at 8:38 am
twicker
Noah,
Two quick things:
1) A hiring decision is, in fact, a willingness-to-pay decision (either I am willing to pay at or above a market salary for your services, or I’m not willing to pay that much). Moving it then into the auction would then potentially raise (or lower) the price, so, IMHO, it’s not at all false.
2) You’re right about people hiring folks outside of the PhD market; however, Jeff specifically referenced the PhD market here, so he already set that boundary condition (and, near as I can tell, never suggested this as being applicable outside academia).
March 22, 2014 at 10:36 am
Raj
Joe – What stood out to me today, twice in fact, were the beautiful diflodafs that lined the sides of the main road I take to get to Rosetta Stone’s headquarters just down the street. They also line a portion of the median, at one point, and I was grateful they were both a visual and spiritual hello from God/the Universe
February 12, 2010 at 7:36 pm
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December 21, 2010 at 4:08 pm
twicker
Too bad there’s not an “edit” function — because, Noah, the more I think about it, the more I think your comment about heterogeneity also works at the PhD level (though, as you point out, maybe to a lesser extent).
As a candidate, I’ll want to tailor my interview to my audience — discussing not only my own work, but how my work fits into the work of my potential future colleagues (this way, I let them know that I’ve not only read and thought about their work, but about how I would fit in with the group — a far more compelling qualification). If I’m on the market interviewing at Big State U, I can tailor my presentation to show how my work complements the work of Professors X and Y and their colleagues) @ BSU. Likewise, if I interview at Universite Ancien d’Europe with Prof.s Ein and Zed, I’ll emphasize what’s important to Ancien (which may be very different than what’s important on this side of the Pond).
In addition to tailoring presentations to individual constituencies, having multiple rounds allows the candidate to refine and improve her/his job talk. Certainly, there’s a regression to the mean effect that happens; however, as with practicing any skill or behavior, there’s also a learning effect that can happen. At Fuqua, one of my fellow management PhD students went onto the market this year; before going, he gave several practice talks where the faculty and students provided feedback. He also tweaked his presentation from talk to talk; after all, you may find that, instead of presenting slides in order X-Y-Z, they’d really be better if they went X-Q-Z-Y. If you have a one-shot, then you don’t have the opportunity to improve.
Lastly, I would think that you’d still want some type of interview in order to assess the very thing that interviews are actually good at: person-organization fit. Does this individual actually fit well within your group, or would s/he be a distracting (or, worse, poisonous) outlier? Given that every department has its own culture (collaborate with people in the department, collaborate with people only at other schools to broaden the reach of the department, ensure formality, ensure openness, etc.), that crucial aspect would seem to disappear. I’d want to keep some sort of interview/visitation, if for no other reason than this.
Final note re: the central interview/job talk: given that everyone would know when it was coming, and everyone would know the format, it would certainly seem to be something that people could more easily prepare for and practice for, leaving the site visits until later. I could see it as a supplement to the in-person (where everyone can see what should be a representation of the best a candidate has to offer), but not as a full substitute for it.