SFB 303 Discussion Paper No. A - 218

Author: Güth, Werner, and Eric van Damme
Title: Equilibrium Selection in the Spence Signaling Game
Abstract: The paper studies the most simple version of the Spence job market signaling model in which there are just 2 types of workers while education is not productivity increasing. To eliminate the multiplicity of equilibria, the general equilibrium selection theory of John Harsanyi and Reinhard Selten is applied. It is shown that this theory selects Wilson's E2-equilibrium as the solution.
Keywords: Inferior strategies in the uniformly pertubed game, Spence job market, Equilibria
JEL-Classification-Number: 0, 21
Creation-Date: January 1989
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