-
I also need to check that the employer's beliefs
-
are consistent with the equilibrium behavior.
-
So let's just stop and pause at that a second.
-
We've never written down a condition like this for equilibrium,
-
but here I have to. Here there was asymmetric information in the model.
-
And, in this equilibrium, one important party to the equilibrium,
-
namely the guys who are going to employ you,
-
that's pretty important right?
-
All they really have to do in this model, of any importance,
-
is form an inference based on your actions.
-
They observe whether you get an education or not
-
and they conclude whether or not you're a good or bad worker.