Screening

4 Key excerpts on "Screening"

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  Microeconomics for Managers, 2nd Edition

  • David M. Kreps(Author)
  • 2019(Publication Date)
  • Princeton University Press

    (Publisher)

  20.4. Signaling and Screening 457 Economists use the terms signaling and Screening to describe arrangements of this sort, where the distinction between the two involves which party in the transaction sets the terms of the deal. If a good-venture entrepreneur, unhappy with the a price of $85 per 1% share, went to an investor and said, “Look here, I’m willing to hold 73% of my venture if you will pay me $237.50 per 1% share, which you should be willing to do because a bad-venture entrepreneur would never choose to do this,” and if you as investor agree, the entrepreneur is signaling. On the other hand, if investors say: “We’ll pay $237.50 per 1% to any en-trepreneur who is willing to retain 73% of her venture and we’ll pay $12.50 per 1% share to anyone who does not retain at least that amount,” then the investors are said to be Screening the entrepreneurs. Signals and screens abound: • When a used-car dealership offers a six-month warranty on used cars it is selling, and especially when it offers a six-month warranty on some cars and not others on its lot, it is signaling: Presumably, offering a warranty on a car in good condition is a lot less expensive (in expectation) than offering the same warranty on a car that is in poor condition. • An insurance company that offers cheap term life insurance, but with “greatly reduced benefits for the first two years,” is Screening, the idea being that if you know you are in poor health, the prospect of paying premiums for up to two years when you are somewhat likely to pass away sooner than that, is not attractive. • A theory of the value of certain forms of education is that education is a signal: Suppose going to college and enduring four years is relatively painful for folks who lack certain desirable skills and, although painful, is less painful for folks who have those skills.

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  Managerial Economics

  • Luke Froeb, Brian McCann, Michael WardShor(Authors)
  • 2017(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  A screen that works just as well, but presents less risk, is a contract with a flat salary of $500 in combination with a $5 commission on each sale. This combination CHAPTER 19 • The Problem of Adverse Selection 249 guarantees each worker a base salary of $500 without risk, and an expected compensation of $1,000 for good workers. If bad workers do not expect to sell at least 60 units, they will reject the offer. And the good workers get a compensation scheme that exposes them to less risk. 19.4 Signaling Let’s recap what we’ve learned so far. Even when we anticipate it and protect ourselves against it, adverse selection results in unconsummated wealth-creating transactions, such as those between • insurance companies and low-risk consumers; • car buyers and sellers with good cars; or • employers and hardworking employees. Screening is a tactic by the less informed party to consummate these transactions by getting rid of the information asymmetry. When consum- ers identify themselves by their choices, wealth-creating transactions can be consummated. In this section, we discuss efforts by an informed party—the low-risk con- sumers, the hardworking employees, and the sellers with good cars—to get rid of the asymmetric information. This is called signaling. Signaling describes the efforts of the more informed parties (consumers) to reveal information about themselves to the less informed party (the insurance company). A successful signal is one that bad types will not mimic. Signaling is closely related to Screening. In fact, any successful screen that separates low- from high-risk consumers, good from bad car sellers, or lazy from hardworking employees can also serve as a signal. To signal, the informed party could use the mechanisms just described: low-risk consumers could offer to buy insurance with a big deductible, good employees could offer to work on commission, and sellers with good cars could include a warranty with the purchase.

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  Personnel Management N5 SB

  TVET FIRST

  • TL Krul(Author)
  • 2015(Publication Date)
  • Macmillan

    (Publisher)

  This is discussed in more detail in module 4 of this book. Activity 2.11 (Class discussion) In class, discuss examples of employees giving an organisation a bad image. How does this affect your opinion of that business? (Would you buy from it in future?) Unit 2.2: Screening and selection Introduction The second stage of the recruitment process involves Screening and selecting candidates. This stage is very important, as it ensures that the manager will only be seeing those candidates who are better suited to the job than the other applicants. This section discusses Screening and selection in more detail. Definition of ‘Screening’ and ‘selection’ Once a recruiter has identified a job vacancy, has carried out a job analysis and has written a job description, it is then important to find the right person to fill that role. However, this is often easier said than done. Advertisements of job openings can attract hundreds of applicants and it is often impossible to interview all of them. 56 For this reason, the recruiter must first screen the applicants. In recruitment, Screening can refer to the task of setting aside those applications where applicants do not have the skills, experience and education necessary for a particular job in an organisation. This can be done by first asking applicants to submit their CVs or résumés. These documents include details of the applicant’s background, and those that do not have the necessary background are eliminated from the group of possible candidates. A CV should include each of the following: • A covering letter: Introduce yourself and explain why you are the best candidate for this job. • Personal details: Include your name, address and contact details. • Education: Any qualifications you may have, seminars you have attended, and other formal education. • Experience: Include the name of the company, when you worked there, what your job involved, and the name and contact details of a reference.

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  Screening in Disease Prevention

  What Works?

  • Walter W Holland, Susie Stewart(Authors)
  • 2018(Publication Date)
  • CRC Press

    (Publisher)

  29 suggest that decision aids must include information about the whole Screening process, including follow-up tests (some of which may be invasive and unpleasant) and treatments. The harms of Screening are still poorly understood by the public, and Screening tests are often viewed uncritically.

  A recent report from the National Consumer Council30 highlights the issue of health literacy defined as ‘the capacity of an individual to obtain, interpret and understand basic health information and services in ways that are health-enhancing,’ and calls for a more user-focused approach from the NHS in making information available in plain language, when and how patients from all groups want it.

  Achieving truly informed consent through shared decision making in Screening, as elsewhere in healthcare, is an admirable goal. It will take continued training and willingness to change the still prevalent attitude that ‘doctor knows best’ from healthcare professionals and patients alike to translate it into everyday practice.

  Economic principles of Screening

  Economic aspects of Screening have come to the fore in the consideration of Screening in the last decade. This is partly because of theoretical advances in the application of economic principles in health services, but also because of the realisation that some Screening procedures consume large amounts of money with little benefit to the population. Raffle has recently illustrated this by an analysis of the resources consumed in Screening for cervical cancer and the number of curable cases identified.31 With the increase in perception by both policy makers and the public that stringent criteria must be applied before Screening procedures are introduced, economic facts have been increasingly demanded in order to try to quantify the costs and benefits in terms that are more readily understood.

  As economic theory has entered the field, it has been increasingly recognised that Screening is not a universal panacea and that it may also do harm. The topic thus joins the list of ethical considerations that need to be appreciated in any Screening programme. As was discussed in Chapter 1

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