Kaelan Dean

Date of Award

2020

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Yu, Sherry

Area of Concentration

Economics

Abstract

As firms are fundamentally operated by a group of people, important hiring decisions can often be influenced by very human heuristics. This thesis expands on previous research to test the descriptive nature of simple search theory models and the role the heuristics may play in preventing their accuracy in predicting labor markets. Since a person’s name acts as a commonly used marker of socioeconomic class, ethnic background, and gender, privileged groups favoring recognizable demographic information will result in favoring the privileged group on average in the application process. This likely increases the amount of time, and thus the costs associated with that time, that it takes for a firm to find a suitable applicant for a needed position. It also increases the time spent searching for a given reservation wage by laborers. This could contribute to lower reservation wages for disenfranchised groups, exacerbating wealth and income inequality and potentially leading to waste as search costs for firms are artificially raised. To address these issues, this thesis proposes a novel application process that may reduce costs for both firms and applicants while also removing this potentially counterproductive demographic information.

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