Thursday, December 21, 2006

Strategic signalling 

This year the American Economics Association has instituted a means by which job seekers can signal two employers of their preference to work for them. The cost of applying for jobs has gotten so low that we routinely receive 125-150 applications for a position -- more if the position is rather broadly defined -- but some of them are from applicants who likely will have better offers. Some schools will decline to use scarce interview slots at the AEA meetings, which is the usual first round interview spot for all jobs in our field in academia (and many in government), on candidates that are unlikely to accept later on-campus interviews because they got better offers. So some applicants might use the signal to tell someone like me, a chair at a mid-level masters-granting institution, that they are keenly interested in the program. The catch is, each job applicant can send no more than two signals.

A new blog devoted to rumors about the economics job market has a post on such signalling. Of the comments on that post, many reported not receiving interview invitations as a result of the signal. (We got one such signal, and I will interview that person ... but it's not clear to me the signal was important in our decision.)

So I'm trying to think about how one would use such signals strategically. One commenter said he or she signaled to a school because of co-location issues. Another indicated he was signalling to schools he thought were good candidates, where he might be on the margin. How one knows that is beyond me, actually. My thought was that if I thought a school might think I was just fishing and not serious about a school -- because they may perceive themselves as below the level I could find a job at -- I would use the signal to tell them I was serious. So nobody would signal a top-50 program, but lots of Directional State Universities would get signals. Your alternative hypotheses invited...

Anyway, some second-year grad student in econ has a fun dissertation topic here, if they can get the data on what types of candidates signaled which schools.