We study talent recruiting in an incomplete-information environment with the acceptance deadline of a job offer being a strategic recruiting device. When the terms of employment stipulated in an offer are invariable, increasing the acceptance deadline raises the chance of hiring the candidates anticipating more promising outside options, but reduces the probability of hiring those with less promising alternatives. The employer is more likely to extend offers with extreme deadlines, i.e., exploding offers, which require immediate responses, and open offers, which have the longest deadline, when the candidate always postpones his acceptance decision until the deadline. In any case, committing itself to a firm deadline is not optimal for the employer; allowing requests for a deadline extension benefits the two parties. When incorporating the acceptance deadline into job offer design, the optimal design can be implemented using a “bonus-for-early-acceptance” (BFEA) mechanism, which is widely applied in practice. In an BFEA mechanism, the employer (1) specifies a date that its offer expires, and (2) provides a salary bonus of accepting the offer, which is decreasing over time before the offer expires. A candidate anticipating a better outside option takes a longer time to respond and receives a lower bonus. Our result indicates that the differences in the BFEA mechanisms adopted in various real-world labor markets reflect the level of competition faced by the employers.
