AbstractAssuming that teachers are concerned with human capital formation and students - with ability signaling, in this paper we model a teacher-student relationship as an agency problem with conflicting interests. In our model, the teacher elicits effort from the student rewarding for it with a grade, the utility of which to the student is an ability signal inferred by the job market. In the event that the job market does not observe individual teachers' grading practice, teachers find grades as costless rewards and optimally choose to be lenient in grading. As a result, 'the problem of the commons'of good grades emerges leading to the depreciation of grading standards and grade inflation. The prediction of the model that the lower the expectations the teacher holds about her students' abilities, the flatter the grading rules she sets up is empirically supported.
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Bibliographic InfoPaper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 487.
Date of creation: May 2010
Date of revision:
Principal-agent model; teacher-student relationship; costless rewards; grading rules; mismatch of abilities and grades; grade inflation; teacher incentives;
Other versions of this item:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- I20 - Health, Education, and Welfare - - Education - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-04 (All new papers)
- NEP-CTA-2010-06-04 (Contract Theory & Applications)
- NEP-EDU-2010-06-04 (Education)
- NEP-LAB-2010-06-04 (Labour Economics)
- NEP-URE-2010-06-04 (Urban & Real Estate Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Make good grades costly to teachers
by Economic Logician in Economic Logic on 2010-07-06 14:23:00
- Botemedel mot betygsinflation?
by Niclas Berggren in Nonicoclolasos on 2010-07-07 09:27:06
- Alejandro Cid & José María Cabrera, 2012.
"Joint-Liability vs. Individual Incentives in the Classroom. Lessons from a Field Experiment with Undergraduate Students,"
Documentos de Trabajo/Working Papers
1206, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
- Cid, Alejandro & Cabrera, José María, 2012. "Joint Liability vs. Individual Incentives in the Classroom. Lessons from a Field Experiment with Undergraduate Students," MPRA Paper 39907, University Library of Munich, Germany.
- Ehlers, Tim & Schwager, Robert, 2012. "Honest grading, grade inflation and reputation," Center for European, Governance and Economic Development Research Discussion Papers 143, University of Goettingen, Department of Economics.
- Ehlers, Tim & Schwager, Robert, 2012. "Honest Grading, Grade Inflation and Reputation," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62051, Verein für Socialpolitik / German Economic Association.
- Florian Birkenfeld & Shima'a Hanafy, 2008. "Was macht eine zentrale Abschlussprüfung aus?," Economics of Education Working Paper Series 0033, University of Zurich, Institute for Strategy and Business Economics (ISU).
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