Noncooperative Equilibrium and Market Signalling

摘要: Among many recent developments in the economics of information, none has generated more controversy than concept "market signalling" introduced by A. Michael Spence. If buyers are less well-informed about product quality sellers, and no additional information is available, market-clearing prices must reflect some weighted average quality. Then if potential sellers highest products have greatest opportunity costs these exceed price, they will not enter market. This "adverse selection" phenomenon is, however, offset higher can adopt activities that operate as a "signal" to buyers. Intuitively, an activity signal entering into it lower marginal cost for products. For example, fly-bynight operator faces advertising per unit sales new entrant who plans build then maintain his reputation. Or, labor market, productivity on job positively correlated with performance school. Therefore, worker personal obtaining given set educational credentials. Similarly, purchasing insurance accepting coinsurance rate specific loss those probability loss. But closer inspection, turns out "informational equilibria"-that equilibria which signalling needed distinguish quality-do stability properties classical Walrasian equilibria. In papers Rothschild Joseph Stiglitz, author (1975, 1977) been shown unless difference between levels sufficiently large there every signal-price pairs S, alternative s' 4 S which, offered single seller, would improve lot. That Cournot-Nash equilibrium. One possible inference might be drawn from this result could important competitive economy. After all, any attempt at were interference, form responses, individuals identify correlation level underlying product. However too simplistic since interference cannot take place until after established. It therefore appropriate suppose economy initially state informational equilibrium signals reflecting quality, ask whether instability likely lead general collapse Following approach adopted Charles Wilson several related attempts introduce quasi-dynamic considerations agent takes account reaction other agents when contemplating "defection" initial S. argued forms stable if, make defector better off, same signalprice pair worse off agents. Where differ *University California-Los Angeles. research was supported National Science Foundation Grant SOC-76-13443 Rand Corporation.