Honest Signaling in Labor Markets
I went to a negotiation competition last Thursday called Les Négociales. We were 120 business school students from the Northern France region.
What was interesting wasn’t so much the competition itself, as the sight of recruiters and head hunters flocking to competition finalists. Competition achievement prowess being an Honest Signal for proficiency at work.
Michael Spence wrote in his Nobel Prize paper ‘Signaling in Retrospect and the Informational Structure of Markets’ on the influence of Education in the Labor Markets. Seen through the lens of Honest Signaling and the Handicap Principle, it would appear that in reality, Education is a Handicap. A handicap that is an honest signal of ability to perform physically and / or intellectually. Or a signal of productive capacity. Likewise, Competitions are a handicap. Both Education and Competitions consume an individual’s resources and produce in themselves no value.
It is interesting to see something everybody knows in a different light.