Provide examples of activities that students can participate in which can generate credible information for employers once you graduate. Explain how these examples fit in the framework of signalling: why is the activity costly, how does it help separate different types of students, why can employers not credibly learn this information in other ways?
Provide examples of activities that students can participate in which can generate credible information for employers once you graduate. Explain how these examples fit in the framework of signalling: why is the activity costly, how does it help separate different types of students, why can employers not credibly learn this information in other ways?
Chapter2: Mathematics For Microeconomics
Section: Chapter Questions
Problem 2.15P
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Provide examples of activities that students can participate in which can generate credible information for employers once you graduate. Explain how these examples fit in the framework of signalling: why is the activity costly, how does it help separate different types of students, why can employers not credibly learn this information in other ways?
![A master student interested in pursuing a PhD is deciding between two courses: advanced
game theory x = A and introduction to game theory x = I. The student can be one of
two types: 0 = L or 0= H.
The PhD admission officer can observe the courses chosen by the student x = {A, I} but
not the type of the student 0. Before observing the course chosen by the student, she
believes both types are equally likely. She admits students only if she is sure that they
are type 0 = H (that is if she believes P(0 = H|x) = 1).
The student gets 10 units of utility from being admitted to a PhD and 0 units if not
admitted, and pays costs c(0) if she chooses advanced game theory and costs 0 if she
chooses introduction to game theory. We assume that c(H) = 0 < c(L) = 15.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F143ed21b-e2ac-44ce-988e-664b0bbfe07d%2F5ad9949e-dd60-4837-9246-fe3575f55fd4%2Ff2cvje_processed.png&w=3840&q=75)
Transcribed Image Text:A master student interested in pursuing a PhD is deciding between two courses: advanced
game theory x = A and introduction to game theory x = I. The student can be one of
two types: 0 = L or 0= H.
The PhD admission officer can observe the courses chosen by the student x = {A, I} but
not the type of the student 0. Before observing the course chosen by the student, she
believes both types are equally likely. She admits students only if she is sure that they
are type 0 = H (that is if she believes P(0 = H|x) = 1).
The student gets 10 units of utility from being admitted to a PhD and 0 units if not
admitted, and pays costs c(0) if she chooses advanced game theory and costs 0 if she
chooses introduction to game theory. We assume that c(H) = 0 < c(L) = 15.
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