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Managerial Economics-DQ (1)

Managerial Economics-DQ (1)

Q The HR department is trying to fill a vacant position for a job with a small talent pool. Valid applications arrive every week or so, and the applicants all seem to bring different levels of expertise. For each applicant, the HR manager gathers information by trying to verify various claims on resumes, but some doubt about fit always lingers when a decision to hire or not to hire is made. • What are the Type I and Two decision errors costs? • Which decision error is more likely to be discovered by the CEO? • How does this affect the HR manager's hiring decisions?

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• In general, type I error occurs when one rejects the null hypothesis with the true value. In this case, if it can be assumed that the null hypothesis for this test is that the candidate is not suitable for the job, so type I decision errors would occur when an HR manager accepts the candidate who is not suitable for the job. On the other hand, type II error occurs when one accepts the null hypothesis with the false value. In this case, type II decision errors would occur when an HR manager rejects the suitable candidate by overlooking the potential of the candidate for the job ("What are type I and type II errors?", 2017).