JOB MARKET SIGNALLING WITH TWO DIMENSIONS OF PRIVATE INFORMATION

Authors

  • Wei Zhang

    Corresponding author
    1. Department of Economics, Northern Illinois University, DeKalb, Illinois, USA
    • Correspondence: Wei Zhang, Department of Economics, Northern Illiinois University, Zulauf Hall 515, DeKalb, IL 60115, USA. Tel: +1-815-753-6977; Fax: +1-815-752-1019; Email: wzhang1@niu.edu.

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  • This paper is a revision of one chapter of my PhD dissertation at the University of Wisconsin–Madison. I am grateful to my advisors Larry Samuelson and William Sandholm for valuable advice and comments. I would also like to thank the Editor, Klaus Zauner, and two anonymous reviewers for very helpful suggestions.

ABSTRACT

We study an extension of job market signalling by introducing another dimension of private information. When two dimensions of attribute are intertwined in parameterizing preferences, the single crossing property no longer holds globally. In seeking the equilibrium prediction, the intuitive criterion and then the more stringent perfect sequentiality refinement are applied. The result depends on the extent to which the second characteristic affects the ability of education to signal. If the effect is mild, the equilibrium acquired is comparable to the separating outcome of the unidimensional benchmark. Otherwise, pooling must occur. This demonstrates that the problem of information transmission is more acute in a multidimensional environment.

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