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(The Evolution of) Post-Secondary Education: A Computational Model and Experiments

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  • Andreas Ortmann
  • Sergey Slobodyan
  • Samuel S. Nordberg

Abstract

We propose a computational model to study (the evolution of) post-secondary education. "Consumer" who differ in quality shop around for desirable colleges or universities. "Firm" that differ in quality signal the availability of their services to desirable students. Colleges and universities, as long as they have capacity, make offers to students who apply and qualify. We study the dynamics and asymptotics for three nested variants of this matching model: the first variant replicates the Vriend (1995) model, the second stratifies both firms and consumers by quality, while the third variant of our model additionally equips some firms with economies of scale. The third variant of our model is motivated by the entry of for-profit providers into low-quality segments of post-secondary education in the USA and empirical evidence that, while traditional nonprofit or state-supported providers of higher education do not have significant economies of scale, the new breed of for-profit providers seems to capture economies in core functions such as advertising, informational infrastructure, and regulatory compliance. Our computational results suggest that this new breed of providers is likely to continue to move up the quality ladder. Our model also lends itself to the study of such issues as the consequences of opportunistic behavior of firms (admittance of unqualified students for fis- cal reasons) and the emergence of behaviorally different consumers (traditional "patronizers", vs "hoppers"), among others. Our computational results suggest that opportunism is a poor long-run strategy and that consumers are rather heterogenous in their shopping behavior but that the mix of behaviorally different consumers is unaffected by the presence of for-profits or opportunistically behaving firms.

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Bibliographic Info

Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp208.

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Date of creation: Apr 2003
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Handle: RePEc:cer:papers:wp208

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  1. Marco Valente, 1998. "Laboratory for Simulation Development," DRUID Working Papers 98-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  2. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  3. Gerard Weisbuch & Alan Kirman & Dorothea Herreiner, 1995. "Market Organization," Working Papers 95-11-102, Santa Fe Institute.
  4. Sergey Slobodyan & Andreas Ortmann, 2004. "(The Evolution of) Post-Secondary Education: A Computational Model and Experiments," Computing in Economics and Finance 2004 318, Society for Computational Economics.
  5. Marco Valente, . "Comments on the paper Equilibrium Selection via Adaptation: Using Genetic Programming to Model Learning in a Coordination , by Chen, Duffy and Yeh," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  6. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
  7. Marco Valente and Esben Sloth Andersen, . "A hands-on approach to evolutionary simulation: Nelson and Winter models in the Laboratory for Simulation Development," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  8. Harald Uhlig & Martin Lettau, 1999. "Rules of Thumb versus Dynamic Programming," American Economic Review, American Economic Association, vol. 89(1), pages 148-174, March.
  9. Vriend, Nicolaas J, 1995. "Self-Organization of Markets: An Example of a Computational Approach," Computational Economics, Society for Computational Economics, vol. 8(3), pages 205-31, August.
  10. Shu-Heng Chen, John Duffy, Chia-Hsuan Yeh, . "Equilibrium Selection via Adaptation: Using Genetic Programming to Model Learning in a Coordination Game," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  11. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
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Cited by:
  1. Andreas Ortmann & Sergey Slobodyan & Samuel S. Nordberg, 2003. "(The Evolution of) Post-Secondary Education: A Computational Model and Experiments," CERGE-EI Working Papers wp208, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  2. Bergh, Andreas & Fink, Günther, 2005. "Escaping Mass Education – Why Harvard Pays," Working Papers 2005:2, Lund University, Department of Economics.

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