Compared to a firm that does not statistically discriminate but has equally poor information about the true qualifications of potential employees, the firm that does statistically discriminate is likely to be less profitable rather than more profitable.

Question

Quizplus · Accepted Answer

Statistical discrimination, while ethically and legally problematic, can in some contexts allow firms to make more informed hiring decisions based on group averages when individual information is lacking, potentially leading to more profitable outcomes compared to firms that do not use any form of discrimination and thus may make less informed hiring decisions.

Compared to a Firm That Does Not Statistically Discriminate but Has