Alex is practicing her college interview for Princeton in the mirror when Haley comes in to style her hair. Princeton is an Ivy League school that is very prestigious and gets a lot of applications. Princeton does not know which applicants it should let in so it screens them. Screening is an action taken by an uninformed party in a situation characterized by adverse selection. There are many things that colleges do to screen applicants. They require high school transcripts, a certain GPA, test scores and they conduct an interview. When someone is interviewed, it’s an opportunity for them to send a signal. A signal is an action taken by an informed party in a situation characterized by adverse selection. Alex wants to signal to Princeton that she’s a good candidate for admission into the university. Haley shares her thoughts about the message that Alex is actually sending.
See more: adverse selection, asymmetric information, college, human capital, human capital investments, imperfect information, interviewing, signaling, signals
Haley auditions for work on a cruise ship. She didn’t get the job but why? Is it because she’s not in the right sorority or was it because she wasn’t as skilled as the others auditioning. If she was equally skilled and not selected because of some other characteristics (like not being in a sorority) then she would have been discriminated against.
See more: discrimination, human capital, interviewing, skills, talent
Andy currently works as Jay and Gloria’s “manny” (a male nanny), but he’s interested in changing jobs. He’s been spending a lot of time with Haley, which initially makes Phil and Claire suspicious of a budding romance. In this scene, Andy approaches Phil because he wants to become a real estate agent. He knows that he’s going to need to acquire more human capital before he’s able to do that so he asks to work as Phil’s new assistant.
In this scene, we watch Andy interview for this job. It turns out that Haley and Andy have been spending time together practicing their interview skills. Interviewing is like other productive activities and requires a special set of skills that we can get by practice. The better someone is at interviewing, the shorter the amount of time is that they will be among the frictionally unemployed (unemployment that results because it takes time to match the right worker to the right job). Phil makes Andy prove his dedication to becoming an assistant and highlights one of the crucial elements of job markets: the matching process. Firms don’t hire just any workers, but instead want to identify workers that will make a good “match” with their firm.
See more: frictional unemployment, interviewing, human capital, labor market, job search, matching, unemployment
In the United States, Halloween is a popular time for Americans (young and old) to wear costumes, even in a professional setting. Clothes can serve as a signal, but also generate externalities. In discussing signaling, it’s important to identify visible markers that may underscore some “hidden” trait. Often, the clothes we wear in professional settings provides a signal of who we may be trying to portray. The court stenographer, dressed as a spider, may not have chosen the best outfit for this day in course. Had she worn this outfit during her interview, she may not have gotten the job despite her qualifications.
A secondary outcome of her decision to dress as a spider is that it imposes external costs on Mitchel in the courtroom. While trying to defend his case, the jurors are distracted by the stenographer’s appearance. The decision to dress up for Halloween was a private decision and has private costs associated with the costume, but it has imposes additional costs on Mitchell as well. These social costs likely outweigh her private benefits, resulting in a net loss to society.
See more: externalities, interviewing, labor market, negative externalities, private benefits, signaling, social costs
Haley is interviewing for a job and it isn’t going well. The labor market is often characterized by adverse selection – there are more candidates who are not suited for a particular job than who are well suited and it’s tough to tell them apart. Screening is an action taken by an interviewer to determine whether or not a candidate will be a good fit. Signaling is action taken by the candidate in order to demonstrate that s/he is a good fit. What examples of signaling and screening are in this scene?
See more: adverse selection, interviewing, labor, product differentiation, screening, signaling, signals