Perfect Bayesian Equilibrium in Signaling Games: The Case of Credential Inflation in the Job Market
Bibliographic record
Abstract
In modern labor markets, rising educational attainment among job applicants often fails to translate into corresponding productivity differences. This phenomenon, commonly referred to as “credential inflation,” raises concerns about the signaling power of education. This paper explores credential inflation through the lens of signaling games in microeconomic theory and investigates how changing cost structures and labor market screening contribute to inefficient signaling. Specifically, a Perfect Bayesian Equilibrium (PBE) model is used, where job applicants privately know their ability level and choose their education level to signal productivity to employers. When the cost of education becomes less sensitive to ability, pooling equilibria emerge, where both high- and low-ability workers choose the same level of education. As a result, education loses its signaling power and inflation of educational requirements occurs. This paper concludes that credential inflation is a rational outcome under certain market conditions and propose policy responses to mitigate its effects on labor market sorting.
Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.
How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.007 | 0.025 |
| Meta-epidemiology (narrow) | 0.001 | 0.001 |
| Meta-epidemiology (broad) | 0.002 | 0.001 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.002 | 0.005 |
| Scholarly communication | 0.003 | 0.005 |
| Open science | 0.002 | 0.002 |
| Research integrity | 0.005 | 0.004 |
| Insufficient payload (model declined to judge) | 0.006 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".