DP3335 Trapped, Delayed and Handicapped
|Author(s):||Susanna Sällström, Anna Sjogren|
|Publication Date:||April 2002|
|Keyword(s):||bayesian learning, self-confidence, self-selection, skill accumulation|
|Programme Areas:||Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3335|
The dynamics of self-confidence are modelled in an environment where rational individuals optimally choose education and occupations with the aim to acquire productive skills while learning about ability. It is shown how the presence of uninformative options can trap individuals below their potential. Furthermore the trade-off between probability of success and value of skills may induce uncertain individuals to acquire less productive skills on their way to ability intensive occupations. The value of information also induces uncertain individuals to delay labour market entry. The model can also explain differences in perseverance in the face of failure.