“Greg Mankiw”:http://gregmankiw.blogspot.com/2006/10/signaling-at-aea-job-market.html publishes some correspondence about the American Economic Association’s ‘signalling’ initiative.

bq. The basic idea of a signaling mechanism is that there is a big part of the market in which departments, in allocating scarce interview slots, have to form an assessment not only of how promising a student looks, but also of how likely that student is to be interested in them. …

bq. Of course students can send any signals they want in their cover letters, but because every cover letter expresses interest, that may be of limited help to departments in separating the signals from the noise. To some extent that may also apply to information in emails and letters from advisors. Those channels can all convey valuable signals of interest, of course. The new signaling mechanism is just a supplement to the traditional ways of signaling interest, and may be of most help to students who are interested in places to which they don’t have other reliable means of conveying their interest. Because they can send a maximum of two signals through the AEA mechanism, the signals may convey some information.

The main target users of this mechanism are job candidates who might be turned down for jobs they would quite like because they (the candidates) are perceived to be unattainable. Consider, e.g., a student with pretty glowing letters from a top school who has always wanted to live in college town X where, say, they went to middle school. The college in that town might assume (reasonably) that the student will get an offer from a more prestigous school, and so it isn’t worth interviewing them. The result is bad for both the student (who actually prefers X to the more prestigous school) and the school (who prefers the student to who they hire). Of course the student could try to communicate this preference through their cover letter, but it is hard to know how seriously to take such letters since the candidate may say something similar to everyone. The signalling mechanism gets around that.

It’s an interesting idea for considering for the APA. I’m worried (as some are about the AEA model) about whether people would be punished for not signalling an interest in a school. But I can also see how it might ameliorate some of the effects of assumptions about prestige in the job market.