A Second Shot at Summer

Reflecting on Harvard’s internship search process, which for many juniors started as early as last fall, reveals how absurdly stressful recruiting is. “Blame it on the economy” is the present mantra: an exogenous scapegoat for the tribulations of recruiting. However, structural failures in the Office of Career Services’ “On-Campus Recruiting” platform are presently more detrimental to the system’s efficiency at pairing applicants and employers. And thus, each year, many qualified applicants are left offer-less, and even students who do manage to receive offers still find themselves sometimes unhappy.

In our system, the unpredictability of resume drops, interview requests, and Superday invitations forces the typical applicant to cast as broad a net as possible when applying. The challenge employers then face is selecting among those genuinely interested in the position and those merely hedging their bets through precautionary recruiting. In the language of George Akerlof, the Nobel Prize-winning economist who described the used-car market as having buyers and sellers with different amounts of information about the transaction to be made, the recruiting market is ridden with “adverse selection.” In the Harvard case, it is not hidden car qualities, but rather uncertain applicant motivations that force employers to bear all the risk of hiring a “lemon.” As a result, it is both the students and employers who face second-best outcomes in summer and job offers.

Like in Akerlof’s used-car market, the OCR platform presents employers with two categories of lemons (though others exist)—the disinterested applicant and the opportunitistic one. The former may not initially be interested in the job at all but feigns interest once granted an interview. This represents an error in selection against the interests of applicants who would like offers from the jobs they prefer most. But because of uncertainty in the market, interviews and offers are misallocated from those who should ideally receive them, those most qualified and committed for a given job—a labor market failure. Conversely, opportunistic applicants are errors in selection against the interest of employers who want hires to remain at their company. Far more typical of the Harvard student, opportunistic interns intend to gather the experience and move on to a preferred job that is presently unavailable. This is largely why offering paid freshman and sophomore summer internships go against the interests of most employers under the present system; firms lose their human capital investments when trained interns leave for other companies.

Ironically, a better system to mediate these market failures is one known best to pre-med students: residency matching. After their residency interviews, graduating medical students submit rank-order lists of programs to a centralized matching service, the National Residency Matching Program, which optimizes pairings with the rankings of applicants submitted by individual residency programs. The NRMP utilizes the Gale-Shapley algorithm, introduced to solve the canonical “stable marriage problem.” In this algorithm, pairings between parties are optimized such that all possibility of “infidelity” in matches is precluded, so no spouse wants to defect from the arranged nuptials—in our case, hired employees do not leave the employer for more preferred opportunities. Additionally, the NRMP imposes a contractual obligation on applicants to attend their matched residency.

Restructuring OCR as a matching service, rather than merely a listing of “unverified” internships and interview space, greatly spreads the risk employers currently bear. OCS should be an impartial intermediary to match market players, though, granted, this is not an entirely closed market. Nevertheless, with preferences blind to the other side, the problem of information asymmetry can be resolved for those who do recruit, as each party is incentivized to honestly and openly reveal its preferences, which is what is lacking in the current system. Job scarcities will still lead to students who are not matched, but the friction generated by adverse selection will be eliminated.

Realigning the selection risk in the manner of residency matching allows firms to recruit the applicants most enthusiastic about working there, removing the adverse selection problem highlighted above. Additionally, the risk-sharing agreement under a reformed system places greater ex-ante responsibility on the applicant to research jobs, as they will be locked in once they apply. And that just might add some tangible value to the many months of Faculty Club info sessions.

Ashin D. Shah ’12, a Crimson photography editor, is an applied mathematics concentrator in Pforzheimer House.