Learning about Markets from Models: Evidence from an AI Hiring Platform

An arXiv paper submitted on 31 October 2026 finds that firm-specific machine learning models on an AI hiring platform used by large employers of low-skill workers are highly predictive of applicant retention at their own firm but no better than chance at other firms. The authors use those models to build a firm-application matrix scoring every application at every firm, finding that an application's improved retention likelihood at a different firm is highly heterogeneous based on traits and driven by two distinct mechanisms. The paper argues the setup captures a "model comparison externality" that lets firms see how they are differentiated from competitors and lets policymakers prioritize interventions, insights available only when a platform holds both the full application pool and each firm-specific model.

Economics General Economics Submitted on 31 Oct 2026 Title:Learning about Markets from Models: Evidence from an AI Hiring Platform View PDF https://arxiv.org/pdf/2611.01226 HTML experimental https://arxiv.org/html/2611.01226v1 Abstract:Machine learning models are increasingly used to not only inform, but make decisions. Sometimes platforms add value by pooling data across contexts to improve models' decision making---but when the optimal decision differs by context, pooling may not increase accuracy. We argue that a platform storing starkly distinct models across contexts nevertheless captures a model comparison externality. Together, these models reflect how decision makers respond differently to the same data in the current equilibrium. Policymakers can use this differentiation to prioritize interventions; firms can learn how they are already differentiated from competitors to focus future investments. Our evidence comes from an AI hiring platform used by large employers of low-skill workers. The platform uses a standardized psychometric assessment to create firm-specific models estimating each application's retention likelihood at that firm. Each firm's model is highly predictive for itself but no better than chance at other firms. We use these models to create a firm-application matrix: each firm scores each application, not only the ones it receives. An application's improved retention likelihood if submitted to a different firm is highly heterogeneous based on traits. Further, these gains are due to two distinct mechanisms. Finally, firms value traits differently even in this low skill market: they disagree about whether important traits improve or worsen retention at the margin. These insights are only possible when a platform can access both the full application pool and each firm-specific model. We explain the value of these insights to firms, policymakers, and platforms. Current browse context: econ.GN References & Citations Loading... Bibliographic and Citation Tools Bibliographic Explorer What is the Explorer? https://info.arxiv.org/labs/showcase.html arxiv-bibliographic-explorer Connected Papers What is Connected Papers? https://www.connectedpapers.com/about Litmaps What is Litmaps? https://www.litmaps.co/ scite Smart Citations What are Smart Citations? https://www.scite.ai/ Code, Data and Media Associated with this Article alphaXiv What is alphaXiv? https://alphaxiv.org/ CatalyzeX Code Finder for Papers What is CatalyzeX? https://www.catalyzex.com DagsHub What is DagsHub? https://dagshub.com/ Gotit.pub What is GotitPub? http://gotit.pub/faq Hugging Face What is Huggingface? https://huggingface.co/huggingface ScienceCast What is ScienceCast? https://sciencecast.org/welcome Demos Recommenders and Search Tools Influence Flower What are Influence Flowers? https://influencemap.cmlab.dev/ CORE Recommender What is CORE? https://core.ac.uk/services/recommender arXivLabs: experimental projects with community collaborators arXivLabs is a framework that allows collaborators to develop and share new arXiv features directly on our website. Both individuals and organizations that work with arXivLabs have embraced and accepted our values of openness, community, excellence, and user data privacy. arXiv is committed to these values and only works with partners that adhere to them. Have an idea for a project that will add value for arXiv's community? Learn more about arXivLabs https://info.arxiv.org/labs/index.html .