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The Dynamics of Statistical Discrimination


  • Lawrence E. Blume


This article demonstrates how learning dynamics select among equilibria in a statistical discrimination model of employment. The static market model exhibits multiple equilibria. The belief revision dynamics generate a Markov market process which, in the long run, is mostly near one and only one of the static equilibria, regardless of initial conditions. Usually policy effects appear in comparative statics, where the equilibrium set moves with different policies. But here policy is also seen to effect which equilibrium is selected even when it has no comparative statics effect at all. Copyright 2006 The Author(s). Journal compilation Royal Economic Society 2006.

Suggested Citation

  • Lawrence E. Blume, 2006. "The Dynamics of Statistical Discrimination," Economic Journal, Royal Economic Society, vol. 116(515), pages 480-498, November.
  • Handle: RePEc:ecj:econjl:v:116:y:2006:i:515:p:f480-f498

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    References listed on IDEAS

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    Cited by:

    1. Kim, Young Chul & Loury, Glenn, 2009. "Group Reputation and the Dynamics of Statistical Discrimination," MPRA Paper 18765, University Library of Munich, Germany.
    2. Levin Jonathan, 2009. "The Dynamics of Collective Reputation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-25, August.
    3. Bruno Borger & Amihai Glazer, 2016. "Signaling, network externalities, and subsidies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(5), pages 798-811, October.

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