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Grading Standards and Education Quality

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  • 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. Au, Pak Hung & Kawai, Keiichi, 2020. "Competitive information disclosure by multiple senders," Games and Economic Behavior, Elsevier, vol. 119(C), pages 56-78.
    2. Christopher Cotton & Haresh Gurnani & Raphael Boleslavsky, 2015. "Demonstrations And Price Competition In New Product Release," Working Paper 1347, Economics Department, Queen's University.
    3. Jain, Vasudha, 2018. "Bayesian persuasion with cheap talk," Economics Letters, Elsevier, vol. 170(C), pages 91-95.
    4. Mark Whitmeyer, 2018. "Dynamic Competitive Persuasion," Papers 1811.11664, arXiv.org, revised Mar 2020.
    5. Bruce Carlin & Christopher Cotton & Raphael Boleslavsky, 2017. "Competing For Capital: Auditing And Credibility In Financial Reporting," Working Paper 1377, Economics Department, Queen's University.
    6. Choi, Jay Pil & Mukherjee, Arijit, 2019. "Optimal certification policy, entry, and investment in the presence of public signals," Working Papers 2019-6, Michigan State University, Department of Economics.
    7. 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.
    8. Le Treust, Maƫl & Tomala, Tristan, 2019. "Persuasion with limited communication capacity," Journal of Economic Theory, Elsevier, vol. 184(C).
    9. 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.
    10. Raphael Boleslavsky & Christopher S. Cotton & Haresh Gurnani, 2017. "Demonstrations and Price Competition in New Product Release," Management Science, INFORMS, vol. 63(6), pages 2016-2026, June.
    11. Cheng Li & Christopher Cotton, 2016. "Clueless Politicians," Working Paper 1341, Economics Department, Queen's University.
    12. Oladokun Omojola* & Lanre Amodu & Nelson Okorie & David Imhonopi & Darlynton Yartey & Evaristus Adesina, 2018. "Assessing the One-Lecture-One-Test Learning Model in Undergraduate Journalism Program Using Cohort Design," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 4(12), pages 591-597, 12-2018.

    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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