Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/274040 
Year of Publication: 
2019
Series/Report no.: 
CSIO Working Paper No. 0147
Publisher: 
Northwestern University, Center for the Study of Industrial Organization (CSIO), Evanston, IL
Abstract: 
Can workers from social groups of comparable productivities obtain comparable employment opportunities in the long run? We model dynamic hiring and employer learning via a general Poisson multi-armed bandit framework. Breakdown environments that reveal on-the-job mistakes rather than successes give a large advantage to marginally more productive groups. Breakthrough environments, in contrast, guarantee comparable payoffs to comparable groups. This insight is robust to various sources of across-groups heterogeneity, belief misspecification by employers, and varying degrees of labor demand scarcity. Equal access to productivity investment only enhances prior differences across groups.
Subjects: 
breakdown learning
breakthrough learning
endogenous bandits
spiraling property
self-correcting property
ranking multiplicity
JEL: 
D83
J71
C73
Document Type: 
Working Paper

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