Skill Uncertainty and Social Inference
Robert J. Oxoby
University of Calgary - Economics; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 2567
Research in psychology indicates that individuals often make inferences regarding unknown individual qualities based on potentially irrelevant (but socially observable) information. This paper explores occupational choices when individuals receive imprecise signals regarding ability and use the observable characteristics of previously successful individuals to infer own ability. Individuals who fail to observe successful predecessors of their same type may underestimate their potential for success in the occupation. We discuss the role of these biases in light of the literature on affirmative action and firm incentives.
Number of Pages in PDF File: 18
Keywords: social Inference, occupational choice, discrimination
JEL Classification: D63, D83, J64, J70
Date posted: January 29, 2007
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