Sunday, July 29, 2007

Maximizing Utility or Profit

The other night I was walking with a group of old friends, all either recent graduates or future job candidates, as it is customary of such company the talk was of employment and academic job market in particular. It was interesting to notice the incentives of academic employers and those of industrial ones.

An industrial employer is more focused on a candidate's how-to-do knowledge. This is because the industrial employer is a profit maximizer and any potential job candidate is evaluated based on his/her abilities to create revenue or the value of his/her marginal productivity.

The academia does not run on profit and sometimes it is really hard to measure the value of marginal productivity of a job candidate. Here an academic employer is more concerned with marginal utility gained from working with a job candidate, thus I wonder if the decision to hire someone is less focused on productivity and is more on marginal utility.

This is only an idea but the question is that if academia hiring process is a utility maximization process or a profit maximizing one. I wonder if this could be investigated.

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