Suppose that a worker A may either have a low productivity of 1 or a high productivity of $2>01. Assuming each worker is paid according to their productivity, explain why the low productivity worker may want to signal productivity in the face of information asymmetry

Suppose that a worker A may either have a low productivity of 1 or a high productivity of $2>01. Assuming each worker is paid according to their productivity, explain why the low productivity worker may want to signal productivity in the face of information asymmetry

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.9P

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Question

Suppose that a worker A may either have a low productivity of 01 or a high productivity of
02 >01. Assuming each worker is paid according to their productivity, explain why the low
productivity worker may want to signal productivity in the face of information asymmetry

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