Talk:Signalling (economics)

This article is written in British English, which has its own spelling conventions (colour, travelled, centre, defence, artefact, analyse) and some terms that are used in it may be different or absent from other varieties of English. According to the relevant style guide, this should not be changed without broad consensus.

This article is rated C-class on Wikipedia's content assessment scale. It is of interest to the following WikiProjects:

Game theory Mid‑importance This article is part of WikiProject Game theory, an attempt to improve, grow, and standardize Wikipedia's articles related to Game theory. We need your help! Join in | Fix a red link | Add content | Weigh inGame theoryWikipedia:WikiProject Game theoryTemplate:WikiProject Game theorygame theory articles Mid This article has been rated as Mid-importance on the importance scale. Economics Mid‑importance This article is within the scope of WikiProject Economics, a collaborative effort to improve the coverage of Economics on Wikipedia. If you would like to participate, please visit the project page, where you can join the discussion and see a list of open tasks.EconomicsWikipedia:WikiProject EconomicsTemplate:WikiProject EconomicsEconomics articles Mid This article has been rated as Mid-importance on the project's importance scale.

I suggest to add the 73 paper (Spence, M. (1973). “Job Market Signaling” Quarterly Journal of Economics 87(3): 355-74) to the references since it is mentioned in the text (and is the seminal paper on the topic and the one which earned Spence the Nobel prize).

I agree but I was unable to find a web link that was publicly available. I shall contact the publisher (OUP) and they usually will grant such requests (esp. when it is so well known) if I cannot find a better source. I also have a copy of the paper as submitted by Spence which he gave rights to publish, however, the peer reviewed QEJ paper would be a more robust source for documentation.

DmacG (talk) 20:11, 9 February 2012 (UTC)[reply]

@DmacG See if it is better now.Lbertolotti (talk) 16:47, 18 June 2015 (UTC)[reply]

According to dictionary.com, signalling is the British spelling vs. signaling in the US. Most of these articles are published in the US, so that's an argument for "correcting" the spelling, but I'm probably biased as an American. And thoughts? Agreeney (talk) 17:32, 9 December 2008 (UTC)[reply]

Signalling seems to be more common on both Wikipedia and on the Web in general, though signaling looks better to me. Should the spelling throughout Wikipedia should be consistent? -Grick(^{talk to me!}) 08:15, 9 March 2007 (UTC)[reply]

Google disagrees with your proposed spelling of signalling over signaling. The site list count is about equal, but that is because Google presents articles with either spelling for the search. Wikipedia's spell checker also disagrees. Maybe there should be more discussion before we make a final decision on this. Muchris 13:53, 22 March 2007 (UTC)[reply]

See WP:ENGVAR for answers to above questions. --Kvng (talk) 22:55, 26 August 2010 (UTC)[reply]

I'm going to go ahead and change the body text to match the title as that seems to be the accepted policy. However, I am not a user of British English so It would be great if a native could check the article again. Colincbn (talk) 07:34, 8 April 2011 (UTC)[reply]

I maybe wrong but haven't the roles of the Principal and Agents been flipped? The Agent is usually the consumer or the buyer and the principal is the one who offers the trade. —Preceding unsigned comment added by 152.14.219.13 (talk) 18:06, 23 November 2010 (UTC)[reply]

Yes, you're wrong. See Principal–agent problemLbertolotti (talk) 13:50, 16 June 2015 (UTC)[reply]

I always thought it was called the sheepskin effect because diplomas (and other official documents) used to be made of sheepskin Pushmedia1 (talk) 01:47, 2 January 2009 (UTC)[reply]

Indeed you are correct in your etymology (I addressed this issue, unless of course it has since been edited out).

One must wonder what effect this had on the Sheep population and equilibrium market value. Perhaps that is why higher education costs are climbing so high.

DmacG (talk) 19:58, 9 February 2012 (UTC)[reply]

@Pushmedia1 @DmacG

Lbertolotti (talk) 16:40, 18 June 2015 (UTC)[reply]

The diagram that i have twice removed had no explanation in the article nor adequate labeling. The creator of the diagram has ranted at me a bit on our talk pages, so i politely explained the problem, thanked him for his efforts, and asked that at the least he provide labeling so that non-experts (the target audience) could make sense of it. That, for me, would be enough. I'm not trying to closely edit, just removing a big chunk that may be good in theory but is unhelpful if it's going to be left incomplete. I've waited a bit, and there's been no change, so i've removed it again. Now i invite other editors: if you know the subject well enough and agree it has value, please integrate it into the article. I can't see how it meets WP guidelines as it was (but chime in if you disagree). To repeat: No offense -- i'd be happy to see it back in, with explanation. "alyosha" (talk) 20:53, 13 March 2012 (UTC)[reply]

• ADAM DAVIDSON (2012-05-15). "Making Choices in the Age of Information Overload". The New York Times. Retrieved 2012-05-21.

Discusses signaling in the context of retail. Would help broaden this article. --Kvng (talk) 02:49, 22 May 2012 (UTC)[reply]

Dr. Daughety has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This article mis-casts signaling. First, contract theory usually presupposes a pre-commitment device (the contract) while signaling involves a sender and a receiver wherein there is no pre-commitment; for a quick summary of the difference, see Mas-Colell, Whinston and Green Ch 13 (which includes signaling as a subsection) versus their Ch 14 (on the principal-agent problem, which is the basis of contracting models).

The rest of the first paragraph also seems to miss the point. In signaling there is some information which cannot be credibly communicated from a "sender" to a "receiver" in a non-costly manner, so the sender takes an action that is costly and the action "signals" something relevant to the receiver. The receiver sees the action and draws an inference about the underlying "type" of sender. In Spence's analysis the "high type" of worker (that is the worker who has high ability) obtains an "education" (which is costly) so as to signal their type; the education itself is of no value whatsoever except as the costly signal. This works if the ability of the worker is (negatively) correlated with the marginal cost of obtaining the education; that is, if the high-ability type's marginal cost of obtaining the education is lower than the low-ability type's marginal cost. The equilibrium is "separating" if the low type would prefer to be recognized as being low rather than engage in the costly activity of acquiring the education (if they did, they would be "mimicking" the high type); otherwise the types "pool."

I found much of the rest of the article disappointing.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Daughety has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Andrew Daughety & Jennifer Reinganum, 2013. "The effect of third-party funding of plaintiffs on settlement," Vanderbilt University Department of Economics Working Papers 13-00001, Vanderbilt University Department of Economics.

ExpertIdeasBot (talk) 15:35, 19 May 2016 (UTC)[reply]

Dr. Mora has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Is important include the recent discussion about sheepskin effects. See Mora and Muro (2015): Jhon James Mora Rodríguez and Juan Muro (2015). On the Size of Sheepskin Effects: A Meta-Analysis. Economics: The Open-Access, Open-Assessment E-Journal, 9 (2015-37): 1—18. http:// dx.doi.org/10.5018/economics-ejournal.ja.2015-37

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Mora has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Jhon James Mora & Juan Muro, 2014. "On the size of sheepskin effects: A meta-analysis," Alcamentos 1401, Universidad de Alcala, Departamento de Economia..

ExpertIdeasBot (talk) 21:31, 21 May 2016 (UTC)[reply]

Dr. Espinola-Arredondo has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Please consider the following minor change:

Original: ". But he does make one key assumption: good-type employees pay less for one unit of education than bad-type employees. " Suggested: ". Spence does make one key assumption: good-type employees pay less for one unit of education than bad-type employees. "

I think that the section " Another model" does not contribute to the discussion, therefore, consider deleting it.

I suggest to include a discussion about the signalling role of environmental regulation in a market that is subject to the threat of entry. See Espinola-Arredondo and Munoz-Garcia (2013), When does environmental regulation facilitate entry-deterring practices, Journal of Environmental Economics and Management, Volume 65 (1), pp 133–152.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Espinola-Arredondo has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Ana Espinola-Arredondo & Felix Munoz-Garcia, 2011. "Environmental Protection Agencies: Measuring the Welfare Benefits from Regulation under Different Information Contexts," Working Papers 2011-11, School of Economic Sciences, Washington State University.

ExpertIdeasBot (talk) 12:07, 2 June 2016 (UTC)[reply]

Dr. Vadovic has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Comments and edits:

insert in brackets: "... greater ability and [it is] difficult for the low ability..."

In sentence: 1. "Signalling took root in the idea of asymmetric information (a deviation from perfect information), which says that in some economic transactions, inequalities in access to information upset the normal market for the exchange of goods and services."

2. change "(a deviation from perfect information)" to (a case of incomlete infromation))

3. "...two types of employees—good and bad—and that employers..." I would replace good and bad with high and low ability types. This would have to be adjusted throughoutthe article. It is more descriptive, but I admit this is not pressing.

4. "...that higher ability persons tend to enroll in "better" (i.e. more expensive) institutions." I would adjust to "...that higher ability persons are able to enroll and obtain certificates from "better" institutions."

5."There is no rational reason for someone choosing a different level of education from 0 or y*" just adjust wording "There is no incentive for someone to choose an level level greater than y*."

6."...the return for not investing in education..." adjust to "the return from not investing in education"

7."...the return for investing in education..." adjust to "the return from investing in education"

8. "Cost can be in terms of monetary, such as tuition, or psychological, stress incurred to obtain the credential" adjust wording to "The cost can be interpreted as monetary cost, such as tuition, or psychological cost, stress incurred to obtain the credential."

9. "For the individual:" change to "For the worker::"

10. In Person(credential) - Person(no credential) ≥ Cost(credential) → Obtain credential Person(credential) - Person(no credential) < Cost(credential) → Do not obtain credential

change "Person" to "Earnings"

11. "Edit: note that this is incorrect with the example as graphed. Both 'l' and 'h' have lower costs than W* at the education level. Also, Person(credential) and Person(no credential) are not clear." I disgree with this edit. It does make sense to me. The cost does not have to be higher than W* just the IC condition has to hold (IR condition holds by default). As I note above I do agree with the second statemet regarding the "Person" notation.

12.

"For the employers:Person(credential) = E(Productivity

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Vadovic has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Maros Servatka & Radovan Vadovic, 2009. "Unequal Outside Options in the Lost Wallet Game," Working Papers in Economics 09/14, University of Canterbury, Department of Economics and Finance.

ExpertIdeasBot (talk) 15:31, 24 August 2016 (UTC)[reply]

Dr. Moldovanu has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article does a good job of explaining the classic work due to Spence. There is not much about further developments and the applications seem completely randomly chosen. Finally, there is no relation to the similar concepts developed in biology, e.g. to the handicap principle due to A. Zahavi.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Moldovanu has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers 5543, C.E.P.R. Discussion Papers.

ExpertIdeasBot (talk) 15:56, 24 August 2016 (UTC)[reply]