Working Paper No. 613

Trapped, Delayed and Handicapped

Published: March 16, 2004Pages: 42Keywords: Self-Confidence; Self-Selection; Skill Accumulation; Bayesian Learning JEL-codes: D83; J24

Trapped, Delayed and Handicapped Anna Sjögren and Susanna Sällström


The dynamics of self-confidence are modelled in an environment where rational individuals optimally choose educations 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 their labor market entry. The model can explain differences in perseverance in the face of failure.

 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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