characterize the trade–offs between signaling by workers and costly auditing by firms. Auditing is always associated with (partial …

This paper studies the implications of agents signaling their moral type in a lying game. In the theoretical analysis …, a signaling motive emerges where agents dislike being suspected of lying and where some types of liars are more …

In Spence's (1973) signaling by education model and in many of its extensions, firms can only infer workers …' productivities. We characterize the trade-offs between signaling by workers and costly information acquisition by firms. Information … workers have low productivity. Our analysis applies also to other signaling problems, e.g. the financial structure of firms …