Signaling with Two Correlated Characteristics
Seung Han Yoo ()
No 1605, Discussion Paper Series from Institute of Economic Research, Korea University
This paper generalizes the canonical feature of signaling models that signaling costs are negatively correlated with productive capabilities. A worker has two characteristics - signaling cost (low/high) and productive capability (low/high) - each combination of which can be realized with positive probability. The main results identify one key condition to guarantee the existence of a unique (partially) separating equilibrium. This finding has new implications for the role of education or a pre-signaling stage that induces the condition to hold.
Keywords: Two correlated characteristics; Signaling (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:iek:wpaper:1605
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