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Grading Standards and Education Quality

Author

Listed:
  • Raphael Boleslavsky
  • Christopher Cotton

Abstract

We consider school competition in a Bayesian persuasion framework. Schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly reveal graduate ability to evaluators. We compare outcomes when schools grade strategically to outcomes when evaluators perfectly observe graduate ability. With strategic grading, grades are less informative, and evaluators rely less on grades and more on a school's quality when assessing graduates. Consequently, under strategic grading, schools have greater incentive to invest in quality, and this can improve evaluator welfare. (JEL D82, I21, I23)

Suggested Citation

  • Raphael Boleslavsky & Christopher Cotton, 2015. "Grading Standards and Education Quality," American Economic Journal: Microeconomics, American Economic Association, vol. 7(2), pages 248-279, May.
  • Handle: RePEc:aea:aejmic:v:7:y:2015:i:2:p:248-79
    Note: DOI: 10.1257/mic.20130080
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    Citations

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    Cited by:

    1. Raphael Boleslavsky & Christopher Cotton & Haresh Gurnani, 2015. "Demonstrations and Price Competition in New Product Release," Working Papers 1347, Queen's University, Department of Economics.
    2. repec:eee:ecolet:v:170:y:2018:i:c:p:91-95 is not listed on IDEAS
    3. Boleslavsky, Raphael & Carlin, Bruce & Cotton, Christopher, 2017. "Competing for Capital: Auditing and Credibility in Financial Reporting," Queen's Economics Department Working Papers 274703, Queen's University - Department of Economics.
    4. Raphael Boleslavsky & Bruce Carlin & Christopher Cotton, 2017. "Competing for Capital: Auditing and Credibility in Financial Reporting," Working Papers 1377, Queen's University, Department of Economics.
    5. Lehr Brandon, 2016. "Information and Inflation: An Analysis of Grading Behavior," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 755-783, April.
    6. Raphael Boleslavsky & Christopher Cotton, 2018. "Limited capacity in project selection: competition through evidence production," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(2), pages 385-421, March.
    7. Christopher Cotton & Cheng Li, 2016. "Clueless Politicians," Working Papers 1341, Queen's University, Department of Economics.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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