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Signaling in a dynamic labor market

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  • van Damme, E.E.C.

    (Tilburg University, School of Economics and Management)

  • Nöldeke, G.

Abstract

This paper analyzes a multiperiod version of the Spence Job Market Signalling Model in which workers cannot commit to an education choice and firms make wage offers at any point in time. The dynamic competition combined with the incomplete information yield a multiplicity of sequential equilibria, including ones that sustain implicit collusion, even though the length of the game is finite. Emphasis is placed on equilibria that satisfy the "independence of never weak best response" criterion of Kohlberg and Mertens (1986). It is shown that in the limit, as the time between offers tends to zero, any such equilibrium results (in expectation) in the unique stable outcome of the static Spence model.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • van Damme, E.E.C. & Nöldeke, G., 1990. "Signaling in a dynamic labor market," Other publications TiSEM b71cd444-f4c7-4282-bcc8-a, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:b71cd444-f4c7-4282-bcc8-af65700ab73f
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