The Welfare Cost of Signaling
AbstractMight the resource costliness of making signals credible be low or negligible? Using a job market as an example, we build a signaling model to determine the extent to which a transfer from an applicant might replace a resource cost as an equilibrium method of achieving signal credibility. Should a ﬁrm’s announcement of hiring for an open position be believed, the ﬁrm has an incentive to use a properly-calibrated fee to implement a separating equilibrium. The result is robust to institutional changes, outside options, many ﬁrms or many applicants and applicant risk aversion, though a sufﬁciently risk-averse applicant who is sufﬁciently likely to be a high type may lead to a preference for a pooling equilibrium. View Full-Text
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Yang, F.; Harstad, R.M. The Welfare Cost of Signaling. Games 2017, 8, 11.
Yang F, Harstad RM. The Welfare Cost of Signaling. Games. 2017; 8(1):11.Chicago/Turabian Style
Yang, Fan; Harstad, Ronald M. 2017. "The Welfare Cost of Signaling." Games 8, no. 1: 11.
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