Information and discrimination : foundations and applications to credit and labor markets.

Summary This thesis begins, in theory, with the informativeness of signals when information is imperfect, followed by applications to credit and labor markets. In chapter 2 we show that the Blackwell criterion can imply the dispersion of conditional expectations - the "supermodular dispersion" criterion proposed by Ganuza and Penalva (2010) - only when the signal is binary. Links between the dispersion of conditional expectations and the Persico criterion can be constructed but with strong restrictions. In Chapter 3, we consider a lender-borrower relationship where borrowers can choose to disclose information by paying a nontrivial cost. The decision to disclose information is endogenous. We show that there are only opaque (transparent) equilibria when the risk-free interest rate is low (high) enough. There are multiple equilibria when the interest rate is intermediate and a credit crunch may result. The model is then extended to an OLG setting and we show that the market can converge to either an opaque or transparent steady state, and can have permanent oscillations between different states for certain parameter configurations. In Chapter 4, we study the impact of hiring discrimination on the skills of workers' investment decision in a directed search model. Either the discriminated group or the favored group may underinvest in skills at equilibrium. Whenever one group of workers underinvests, the other group remains highly skilled and the firms' profit is lower relative to the level in the economy where discrimination is absent.