ABSTRACT
The more efficient workers’ screening and signalling the less will be the uncertainty for firms and the less firms’ screening will be required. Firms will devote resources to familiarising themselves with the educational value of different education programmes, attempt to establish stable, continuous relationships with educational establishments and focus their advertising, signalling and screening upon those establishments. This chapter presents models to describe worker and firm decision making under uncertainty may appear to be excessively mechanistic and unrealistic. Uncertainty arises because the worker does not know which firms are offering each wage; for example, which 14 of the 155 firms are offering £130 per week. Clearly any model of uncertainty must specify precisely the decision rule to be adopted. Elementary models of the labour market assume that each worker knows precisely the pecuniary and non-pecuniary rewards attached to each job, where all relevant jobs are, and where vacancies exist.
