Some Companies Subject Their Applicants to Extensive Tests

question 60

Multiple Choice

Some companies subject their applicants to extensive tests. Why?

• A)To reduce the informational asymmetry between the firm and the applicant.
• B)To screen the applicant to avoid the problem of adverse selection.
• C)To gather more information about the applicant.
• D)All of the above.

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Definitions:

Expected Opportunity Loss

The anticipated loss for not choosing the best possible option or course of action in decision-making processes.

Expected Monetary Value

A statistical technique in decision making used to calculate the average outcome when the future includes scenarios that may or may not happen.

Expected Value

The long-run average value of repetitions of the experiment it represents, often considered as the mean in probability.

Perfect Information

A situation in a game or economic model in which all participants know all the relevant details, including the actions and payoffs of all players.