The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Signalling

  • John G. Riley
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_1557

Abstract

If product quality of individual units cannot be observed at the time of purchase, but buyers do eventually learn average quality, goods will be traded at a price which reflects buyers’ beliefs about this average. The price will then adjust until buyers’ beliefs about average quality are confirmed ex post.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John G. Riley
    • 1
  1. 1.