Here is another manifestation of information asymmetry. How does a new car that entered the market convince customers about its quality? Here, the car manufacturer knows much more about the product than the customer.
This is what Hyundai did in the US, recovering from a phase of making average-quality cars into better ones. It offered its customers a 10-year / 100,000-mile warranty. This is called a signal, which is an expensive action that reveals information.
A certificate of higher education—even better, from a top university—is a powerful signal to the hiring manager. Whether the degree subject is directly applicable to the job or not, the hiring company sees the certificate as evidence of the candidate’s quality, a signal offered by the employee to the employer.
