Expectation formation and learning in the labour market with on-the-job search and Nash bargaining

On the ambiguity of job search

“…1 1 Another alternative to represent imperfect labor information is to assume that workers are recursively updating market information using the adaptive learning approach discussed by Evans & Honkapohja (2012) (e.g., Damdinsuren & Zaharieva, 2022; Di Pace et al., 2021). It is important to note that ambiguity aversion and subjective learning are not incompatible, instead our ambiguity‐aversion model has particular advantages in terms of tractability. …”