Generalizing using statistical discrimination is:
A) an irrational response and always leads to loss of surplus.
B) a rational response to being on the wrong end of an information asymmetry.
C) a rational response, although government always steps in to prevent it.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

Generalizing using statistical discrimination is a rational response to being on the wrong end of an information asymmetry. It is a way to make decisions based on statistical patterns when individual information is not available. However, this can lead to biases and unequal treatment. Therefore, efforts should be made to reduce information asymmetry and provide more individual information to prevent discrimination.

Generalizing Using Statistical Discrimination Is