Market signaling: informational transfer in hiring and related screening processes
Market signaling, a phrase formulated by Mr. Spence, means the activities and characteristics of individuals which are visible to somebody else and convey information in a market, such as the job market. This study attempts to explain the informational content of market signals.
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absolute advantage active signaling allocation assumed assumption average blacks characteristics competitive conditional distribution conditional probability conspicuous consumption consumption good industry context convex set cooperative game decisions defined depend differential signaling costs discrimination education costs effective signal efficiency eliminate employer employer's beliefs equi equilib equilibrium conditions equilibrium configurations example fact Figure firm function George Stigler given guarantee Hence high-productivity hiring income indices individual informational structure investment job market signaling labor market level of education librium loan lottery lower marginal product market data market equilibrium market signaling game Markov chain multiple equilibria naling negatively correlated no-signaling observable offered wage schedule optimal overinvestment patterns perfect information ployer population possible potential signals problem productive capabilities Proof proportion Proposition race random rational risk-aversion rium score screening seller signaling activity signaling equilibrium signaling system situation suppressing Thomas Schelling tion tive tivity unalterable variance-covariance matrix wage differentials