The statistical discrimination model and Becker's "taste-for-discrimination" model:

Question

Quizplus · Accepted Answer

The statistical discrimination model predicts that firms that discriminate based on observable characteristics, such as race or gender, may have higher profits due to a belief that certain groups are less productive or less reliable. On the other hand, Becker's taste-for-discrimination model predicts that firms that discriminate based on personal preferences or biases will have lower profits. This is because they may choose less productive workers or miss out on potential customers due to their discriminatory practices. Therefore, the two models differ in terms of the potential impact on profits for discriminating firms.

The Statistical Discrimination Model and Becker's "Taste-For-Discrimination" Model