This file was moved to Wikimedia Commons from en.wikipedia using a bot script. All source information is still present. It requires review. Additionally, there may be errors in any or all of the information fields; information on this file should not be considered reliable and the file should not be used until it has been reviewed and any needed corrections have been made. Once the review has been completed, this template should be removed. For details about this file, see below.Check now!
Summary
DescriptionSimple signalling framework.PNG
English: This is a simple two person signalling model. It is optimal for the higher ability person to obtain the credential (the observable signal) but not for the lower ability individual. The structure is as follows:
There are two individuals with differing ability (productivity) levels. The premise for the model is that a person of high ability (h) has a lower cost for obtaining a given level of education than does a person of lower ability (l). Cost can be in terms of monetary, tuition, or psychological, stress incurred to obtain the credential.
Wo is the expected wage for an education level less than S*,
W* is the expected wage for an education level equal or greater than S*
Thus, if both individuals act rationally it is optimal for person h to obtain S* but not for person l.
In equilibrium, in order for the signalling model to hold, the employer must recognize the signal and pay the corresponding wage. One can see that the cost/benefit structure for a signal to be effective must fall within certain bounds or else the system will fail.
I drew this myself in mspaint, do whatever you want with it, I don't care.
This work has been released into the public domain by its author, DmacG at English Wikipedia. This applies worldwide. In some countries this may not be legally possible; if so: DmacG grants anyone the right to use this work for any purpose, without any conditions, unless such conditions are required by law.Public domainPublic domainfalsefalse
Original upload log
The original description page was here. All following user names refer to en.wikipedia.
This is a simple two person signalling model. It is optimal for the higher ability person to obtain more education but not for the lower ability individual. One can see that the cost/benefit structure for a signal to be effective must fall within certai
Captions
Add a one-line explanation of what this file represents