We introduce a model of two-sided statistical discrimination in which worker and firm beliefs are complementary. Firms try to infer whether workers have made investments required for them to be productive, and simultaneously, workers try to deduce whether firms have made investments necessary...

A designer conducts random searches to detect criminals, and may condition the search probability on individuals' appearance. She updates her belief about the distribution of criminals across appearances using her search results, but incorrectly takes her sample distribution for the population...