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KCI등재 학술저널

Coarse Information Leads to Less Effective Signaling

  • 5

This study considers firms’ coarse information about a worker’s pos-sible types in Spence’s (1973) job market signaling model. Using incentive compatibility constraints appropriate to coarse information, we derive perfect Bayesian equilibria, which are refined into a unique equilibrium by invoking an extension of Cho and Kreps’ (1987) Intuitive Criterion. In the unique re-fined equilibrium, a high-type worker may acquire a higher education level with a lower wage than in Spence’s (1973) model. This implies that education sig-naling may be less effective signal when firms have coarse information about a worker’s possible types compared to that in Spence (1973).

1. INTRODUCTION

2. THE MODEL

3. PERFECT BAYESIAN EQUILIBRIUM

4. REFINEMENTS OF THE PERFECT BAYESIAN EQUILIBRIA

5. MAIN IMPLICATIONS

6. CONCLUDING REMARKS