EconZen

That might be a little less obvious than you suppose it is - could you elaborate?

What about information asymmetries? Even with no statistical discrimination, if effort and intelligence were not readily observable by employers and they selected people with the same observable (and relevant for the job) characteristics at random it seems like that alone would provide incentive for signalling.

Why do you think it's only driven by statistical discrimination? Could you explain?

That is trivially true in hiring because the only way to avoid practice statistical discrimination is random selection from applicants.

I disagree and propose the alternative:

If information were not costly, no one would have any reason to engage in signaling.

Signaling is a cheap alternative to information gathering. Statistical discrimination is only one method of overcoming the cost of gathering information.

Ivin

This is true, but because we have limited cognitive abilities, we *have* to use heuristics like statistical discrimination.

Is signalling not a form of statistical discrimination?