"WE ARE TAUGHT FROM A YOUNG AGE THAT ONE SHOULD NEVER JUDGE A BOOK BY IT'S
COVER . BUT WE MUST; IT IS OFTEN ALL WE GET TO SEE." To start off, one of the most important terms in economics of information is ASYMMETRIC INFORMATION, or imperfect information. For instance, I sell you a second-hand product at a lower price, and deep inside I know that the camera stops working after a certain time; however, you've got no idea. Surprisingly, many people take advantage of missing information, and use it as a benefit to determine what to do. A common effect driven by knowledge shortage is discrimination; especially in such a competitive world. As I was reading naked economics there was an idea that made me think how people are guided by the same "squared" mentality. Many people are constantly looking for work, and gender is a huge advantage or disadvantage depending where you are working at. |
"Rational discrimination" called my attention. Normally, discrimination is irrational, yet this idea of hiring employees concluded why in certain situations, discrimination takes the lead in a decision. For example, if a male was competing against a women to get hired, probably the male would get the job. The interviewers have no specific information about either of the candidates, nor their future family plans; they have no clue what will happen. |
In this case, Charles Wheelan, gives a clear explanation to this stereotypical resolution. Demographics show that most humans have the settled idea that they will begin a family some day. Yet, only female candidates take paid maternity leave. That's not a stable thought as to hire men vs. women; however, firms take a risk, because women may not return to work after having a child, leaving the company with no employee, therefore investing money when finding, hiring, and training another worker. "The female candidate is punished because the firm has no information on her specific circumstances but good data on broad social trends." IS THIS FAIR?. It might seem 100% unfair, and I agree, but at the same time, the firm's logic makes sense, they have NO OTHER INFORMATION TO RELY ON. |