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Job-market signaling and screening: An experimental comparison

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  • Kübler, Dorothea
  • Müller, Wieland
  • Normann, Hans-Theo

Abstract

We analyze the Spence education game in experimental markets. We compare a signaling and a screening variant, and we analyze the effect of increasing the number of competing employers from two to three. In all treatments, efficient workers invest more often in education and employers pay higher wages to workers who have invested. However, separation of workers is incomplete and wages do not converge to equilibrium levels. In the signaling treatment, we observe significantly more separating outcomes compared to the screening treatment. Increasing the number of employers leads to higher wages in the signaling sessions but not in the screening sessions.

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  • Kübler, Dorothea & Müller, Wieland & Normann, Hans-Theo, 2008. "Job-market signaling and screening: An experimental comparison," Games and Economic Behavior, Elsevier, vol. 64(1), pages 219-236, September.
    • Handle: RePEc:eee:gamebe:v:64:y:2008:i:1:p:219-236
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    7. Kübler, Dorothea & Müller, Wieland & Normann, Hans-Theo, 2008. "Job-market signaling and screening: An experimental comparison," Games and Economic Behavior, Elsevier, vol. 64(1), pages 219-236, September.
    8. Lisa L. Posey & Abdullah Yavas, 2007. "Screening equilibria in experimental markets," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 32(2), pages 147-167, December.
    9. Grebe, Tim & Ivanova-Stenzel, Radosveta & Kröger, Sabine, 2016. "“Buy-It-Now” or “Sell-It-Now” auctions: Effects of changing bargaining power in sequential trading mechanisms," Economics Letters, Elsevier, vol. 142(C), pages 27-30.
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    14. Koch, Alexander K. & Morgenstern, Albrecht & Raab, Philippe, 2004. "An Experimental Test of Career Concerns," IZA Discussion Papers 1405, Institute of Labor Economics (IZA).
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    18. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2022. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2022-206, WZB Berlin Social Science Center.
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    20. Bronsert, Anne-Kathrin & Glazer, Amihai & Konrad, Kai A., 2014. "Old Money, the Nouveau Riche and Brunhilde's Marriage Dilemma," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100385, Verein für Socialpolitik / German Economic Association.
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    23. Miguel A. Fonseca & Francesco Giovannoni & Miltiadis Makris, 2020. "Auctions with external incentives: experimental evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(4), pages 1003-1043, December.
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    More about this item

    Keywords

    Job-market signaling Job-market screening Sorting Bayesian games Experiments;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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