Signalling And Screening
نویسنده
چکیده
Signalling refers to any activity by a party whose purpose is to inuence the perception and thereby the actions of other parties. This presupposes that one market participant holds private information that for some reason cannot be veri ably disclosed, and which a¤ects the other participants incentives. Excellent surveys include Kreps and Sobel (1994) and Riley (2001). The classic example of market signalling is due to Spence (1973, 1974). Consider a labor market in which rms know less than workers about their innate productivity. Under certain conditions, some workers may wish to signal their ability to potential employers, and do so by choosing a level of education that distinguish themselves from workers with lower productivity.
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