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 are true.

Question

Quizplus · Accepted Answer

Generalizing using statistical discrimination can be seen as a rational response to the lack of complete information (information asymmetry). It allows individuals or organizations to make decisions based on the average characteristics of a group rather than on individual characteristics, which might be more costly or difficult to obtain.

Generalizing Using Statistical Discrimination Is