an:00018249
Zbl 0741.90012
van Damme, Eric; G??th, Werner
Equilibrium selection in the Spence signaling game
EN
Game equilibrium models II. Methods, morals, and markets, 263-288 (1991).
1991
a
91B44 91B50 91A80 91B40
job market signaling; general equilibrium selection theory; Wilson's \(E_ 2\)-equilibrium; primitive equilibria; tracing procedure
Summary: [For the entire collection see Zbl 0729.00018.]
The paper studies the most simple version of the Spence job market signaling model in which there are just two types of workers while eduction is not productivity increasing. To eliminate the multiplicity of equilibria, the general equilibrium selection theory of J. Harsanyi and R. Selten is applied. It is shown that without invoking Pareto comparisons, the Harsanyi/Selten theory selects Wilson's \(E_ 2\)- equilibrium as the solution. The main elements in the analysis are the study of primitive equilibria and of the tracing procedure. The analysis sheds light on the ``evolutive'' and the ``eductive'' aspects of Harsanyi and Selten's theory and it also allows a better understanding of the older, non game theoretic literature on signaling.
Zbl 0729.00018