Market signaling with grades

• 成果类型: Article
• 署名作者: Daley, Brendan; Green, Brett
• 署名单位: Duke University; University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2013.10.009
• 发表日期: 2014
• 页码: 114-145
• 关键词: Signaling; asymmetric information; Information economics

摘要

We consider a signaling model in which receivers observe both the sender's costly signal as well as a stochastic grade that is correlated with the sender's type. In equilibrium, the sender resolves the trade-off between using the costly signal versus relying on the noisy grade to distinguish himself. We derive a necessary and sufficient condition loosely, that the grade is sufficiently informative relative to the dispersion of (marginal) signaling costs across types under which the presence of grades substantively alters the equilibrium predictions. Specifically, separating equilibria do not survive stability-based refinements. Instead, the prediction depends on the prior distribution over the sender's type. For example, with two types it involves full pooling when the distribution places sufficient weight on the high type and partial pooling otherwise. Finally, the equilibrium converges to the complete-information outcome as the distribution tends to a degenerate one resolving a long-standing paradox within the signaling literature. (C) 2013 Elsevier Inc. All rights reserved.