Learning to Signal in Market

We formulate a dynamic learning-and-adjustment model of a market in which sellers choose signals that potentitally reveal their types. If the dynamic process selects a unique limiting outcome, then that outcome must be an undefeated equilibrium; though to be undefeated does not suffice to be the sole limiting outcome. If a Riley outcome exists that provides "high" type sellers with a higher utility than any other equilibrim outcome, then that outcome is the unique limiting outcome of our model. In the absence of a Riley outcome,. or if high type workers obtain higher utility in a pooling equlibrium than in the Riley outcome, a unique limit outcome will only emerge under very stringent conditions. If these conditions fail, the market will cycle between various equlibria and, possibly, nonequilibrrium outcomes.(This abstract was borrowed from another version of this item.)