Discretion in Hiring

76 Pages Posted: 16 Nov 2015 Last revised: 2 Dec 2015

See all articles by Mitchell Hoffman

Mitchell Hoffman

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Lisa Kahn

Yale School of Management

Danielle Li

Harvard University - Business School (HBS)

Date Written: November 2015

Abstract

Job testing technologies enable firms to rely less on human judgement when making hiring decisions. Placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers. We study the introduction of job testing across 15 firms employing low-skilled service sector workers. When faced with similar applicant pools, we find that managers who appear to hire against test recommendations end up with worse average hires. This suggests that managers often overrule test recommendations because they are biased or mistaken, not only because they have superior private information.

Suggested Citation

Hoffman, Mitchell and Kahn, Lisa and Li, Danielle, Discretion in Hiring (November 2015). NBER Working Paper No. w21709. Available at SSRN: https://ssrn.com/abstract=2691207

Mitchell Hoffman (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lisa Kahn

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Danielle Li

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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