I am late to this #TweetABlackEconomistsPaper tag (h/t @femonomics, @florianederer) but better late than never.

Read below to learn about a cool theory paper, which I first learned about from my colleague, @NimaHaghpanah https://twitter.com/florianederer/status/1275240022984318977

Imagine a group of agents searching for opportunities that vary in quality. Of course, people are better off when they can direct their search towards better opportunities.

Teddy Mekonnen shows that the answer is NO in
"Random versus Directed Search for Scarce Resources"

With directed search, each agent has an inclination to lean towards better options. No one internalizes her effect on others --> Congestion Externality.

With random search, the options left on the table must have been rejected by others --> Adverse Selection.

Which dominates?

Teddy finds that random search is better using a clever argument with a simple logic:

Adverse selection
-> Agents are less picky today.
-> Lower congestion externalities.
-> Social planner is happier.

That's it: a super clean argument for a fundamental question.

Indeed, a large part of Teddy's innovation is to develop a new model in which this argument emerges so cleanly. Moreover, the paper is very easy to read.

Which means this is the right time to stop reading Twitter, and turn instead to Teddy's paper:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3275771