Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62676
Authors: 
Kübler, Dorothea
Weizsäcker, Georg
Year of Publication: 
2001
Series/Report no.: 
Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2001,86
Abstract: 
A model of herding behavior on the labor market is discussed where employers only receive signals with limited precision about the workers' types, but can observe previous employers' decisions. In particular, we study a situation where the employer and the worker can influence the signal probabilities, in the sense that the employer tries to increase the precision of the signal about the worker's type whereas the worker tries to get a good signal, independent of her type. In a two-period model, we derive conditions for an equilibrium in which only down-cascades occur, i.e.e., the second employer does not hire a worker with a bad history even if he receives a favorable private signal about the worker's type, but he does follow his own signal if the worker's history is good.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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