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Signaling

168 bytes added, 05:07, 24 May 2015
Concise description of theory
== Concise description of theory ==
*In economics, more precisely in contract theory, '''signaling''' is the idea that one party (termed the ''agent'') credibly conveys some information about itself to another party (the ''principal''). For example, in Michael Spence's job-market signalling model, (potential) employees send a signal about their ability level to the employer by acquiring certain education credentials. The informational value of the credential comes from the fact that the employer assumes it is positively correlated with having greater ability.
*In the IS literature, signaling theory has been used to study how IT artifacts and Non-IT mechanisms could mitigate consumers' uncertainty about sellers and products.
== Diagram/schematic of theory ==
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