Firms may choose to discriminate in order to reduce information costs associated with screening applicants.

Question

Quizplus · Accepted Answer

Discrimination can reduce the number of job applicants, making it easier and cheaper for firms to screen them. For example, a firm might choose to only hire people from certain universities or with certain qualifications, rather than having to evaluate each applicant on an individual basis. However, this practice can also lead to missed opportunities and a less diverse workforce.

Firms May Choose to Discriminate in Order to Reduce Information