Quick Signals from High School. Consider the application, Lakisha Washington versus Emily Walsh. According to the researcher, [Employers] want a quick signal whether the applicant seems suitable. Suppose a firm hiring workers cannot distinguish between high-productivity and low-productivity applicants, but the firm knows whether an applicant graduated from high school H, where the average achievement level is relatively high, or high school L, where the average achievement level is relatively low (Related to Application 4 on page 699.)
a. If the firm will hire one of two applicants, one from high school H and a second from high school L, which is the better choice?
b. What insights does this exercise provide about why firms are more likely to interview and hire applicants with white-sounding names?