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Recall that in the statistical model of discrimination, employers observe , where: . You can think of as test score or GPA. is the true
Recall that in the statistical model of discrimination, employers observe
where:
You can think of
as test score or GPA.
is the true productivity of the individual. Recall that
is distributed normal, with mean and variance
Finally, recall that since employers do not know
they operate according to the following:
What happens to
the weight placed on the observed
when the variance of the error term,
increases?
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