The cognitive psychology view of brand equity is based on an assumption of knowledge in
the marketplace; i.e. the individual has access to information about the brand. This view does not explicitly account for the information asymmetries inherent in these market interactions(Erdem & Swait 1998). Information economics overcomes this limitation by accounting for interactions among the involved parties, and recognising problems that arise from asymmetric information in the market (Spence 1973). In employment markets, asymmetric information motivates the information seeker to search for information in order to overcome the perceived information gap; consequently information costs may be incurred. The roots of this approach stem from the work of Vickrey (1961), Mirrlees (1971), Akerlof (1970) and Spence (1973) in signalling theory. This theory suggests that in order to avoid adverse selection, information seekers use signals such as warranties, price, and brands to formulate their quality judgements
(e.g. Dawar & Parker 1994; Koku 1995). In the context of branding, Kirmani and Rao (2000)suggest that brands are sale-independent signals; they communicate unobservable quality,regardless of a transaction (Erdem & Swait 1998). Information asymmetry and signaling theory have potential applications in employment markets as would-be employees rarely have perfect information about a prospective employer. Employment with a particular firm will have long-term implications for employees (and employers) and these consequences motivate potential employees to invest effort into gaining information about prospective employers.