Spence Revisited: Signaling and the Allocation of Individuals to Jobs
Spence (1974a) considered a variant of his signaling model in which there are two types of jobs, and in which signaling can increase wealth by improving the allocation of individuals to jobs. Using results in signaling games since Spence’s work---the Riley outcome (Riley, 1979), the intuitive criterion (Cho and Kreps, 1987), and undefeated equilibrium (Mailath et al., 1993)---it is possible to be more precise than Spence was in determining when signaling would occur and what the effect of signaling on wealth would be. We find the likelihood of efficient signaling, inefficient signaling, and pooling equilibria depends on the fraction of more able individuals in the population. With non-trivial gains from job allocation, inefficient signaling does not appear to be the most likely outcome. Key Words: signaling, pooling, Riley outcome, intuitive criterion, and undefeated equilibrium
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: Thelma C. Raley Hall, Boone, North Carolina 28608|
Web page: http://economics.appstate.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mailath George J. & Okuno-Fujiwara Masahiro & Postlewaite Andrew, 1993. "Belief-Based Refinements in Signalling Games," Journal of Economic Theory, Elsevier, vol. 60(2), pages 241-276, August.
- In-Koo Cho & David M. Kreps, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 102(2), pages 179-221.
- Michael Waldman, 1984.
"Job Assignments, Signalling, and Efficiency,"
RAND Journal of Economics,
The RAND Corporation, vol. 15(2), pages 255-267, Summer.
- Perri, T. J., 1995.
"Testing for ability when job assignment is a signal,"
Elsevier, vol. 2(1), pages 106-107, March.
- Perri, Timothy J., 1994. "Testing for ability when job assignment is a signal," Labour Economics, Elsevier, vol. 1(3-4), pages 365-381, September.
When requesting a correction, please mention this item's handle: RePEc:apl:wpaper:11-16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (O. Ashton Morgan)
If references are entirely missing, you can add them using this form.