Cursed Job Market Signaling

Po-Hsuan Lin and Yen Ling Tan

Papers from arXiv.org

Abstract: There is behavioral evidence across economic settings that people often neglect how other people's strategies depend on their private information, a phenomenon known as cursedness. This paper characterizes the Cursed Sequential Equilibrium (CSE) to study the implications of cursedness in Spence's job market signaling game. We show that as players become more cursed, the worker attains less education -- a costly signal that does not improve productivity -- suggesting that cursedness improves efficiency in information transmission.

Date: 2025-03
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