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 …

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 …

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

manipulation. We show that certification of private information by a third party may not always be in the interest of the principal … if this certification raises the specter of collusion. …

characteristic of the sender. This result stands in stark contrast to a scenario in which no signaling is involved. We fully describe …