For this discussion, your focus will be to think through what asymmetric information, moral hazard, and adverse selection have to do with hiring a police officer.
Instructions
Consider the following statement:
Many police officer positions require the applicant to have a college degree even though the tasks of a police officer rarely call upon college course material.
In your discussion post, address the following:
Speculate on why police departments do not increase their applicant pool by dropping this requirement and how asymmetric information, moral hazard, and adverse selection are involved?
Full Answer Section
Adverse selection is a situation where the people who are most likely to engage in undesirable behavior are the ones who are most likely to apply for a job. In the case of hiring a police officer, adverse selection could arise if the people who are most likely to use excessive force or abuse their authority are the ones who are most likely to apply for the job.
The college degree requirement is a way for police departments to try to reduce the amount of asymmetric information in the hiring process. By requiring applicants to have a college degree, police departments can be more confident that the applicants have the basic knowledge and skills necessary to do the job.
However, the college degree requirement also creates a moral hazard problem. Applicants who do not have a college degree may be more likely to take risks in order to get the job, such as lying on their application or exaggerating their qualifications.
The college degree requirement also creates an adverse selection problem. People who are most likely to be good police officers may not apply for the job because they do not have a college degree.
For these reasons, police departments may be hesitant to drop the college degree requirement, even though it would increase the applicant pool. They may believe that the benefits of reducing asymmetric information outweigh the risks of creating moral hazard and adverse selection problems.
Here are some other factors that police departments may consider when deciding whether or not to drop the college degree requirement:
- The cost of training and education for new officers.
- The availability of qualified applicants without a college degree.
- The public's perception of the police force.
- The legal requirements for police officers in the state or city.
Ultimately, the decision of whether or not to drop the college degree requirement is a complex one that must be made on a case-by-case basis. There is no easy answer that will work for every police department.
Sample Answer
Asymmetric information is a situation where one party to a transaction has more or better information than the other party. In the case of hiring a police officer, the police department has more information about the job requirements and the risks involved than the applicant.
Moral hazard is a situation where one party to a transaction takes more risks because they are protected from the consequences of those risks. In the case of hiring a police officer, a moral hazard problem could arise if the police department is not able to effectively monitor the behavior of its officers.