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Why Competition may Discourage Students from Learning? A Behavioral Economic Analysis

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  • X. Henry Wang
  • Bill Yang

Abstract

Combining the notion of self-worth in sociology and educational psychology with economic modeling, the present paper studies incentives on students' learning in a behavioral economic model. Allowing for 'conservativeness' to modify Bayes' rule in processing newly released information and employing the concepts of 'loss aversion' and 'endowment effect' in behavioral economics, we attempt to explain analytically why competition among students may discourage them from learning. Within an educational institution, competition as an incentive scheme evaluates students on their relative performance, which strengthens the connection between students' relative performance and their perceived ability. When the perception of ability becomes a major concern, competition may motivate students to make a low effort - a strategy to win by not losing.

Suggested Citation

  • X. Henry Wang & Bill Yang, 2003. "Why Competition may Discourage Students from Learning? A Behavioral Economic Analysis," Education Economics, Taylor & Francis Journals, vol. 11(2), pages 117-128.
  • Handle: RePEc:taf:edecon:v:11:y:2003:i:2:p:117-128
    DOI: 10.1080/09645290210131656
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    References listed on IDEAS

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    1. Correa, Hector & Gruver, Gene W., 1987. "Teacher-student interaction: A game theoretic extension of the economic theory of education," Mathematical Social Sciences, Elsevier, vol. 13(1), pages 19-47, February.
    2. Caroline M. Hoxby, 2000. "Does Competition among Public Schools Benefit Students and Taxpayers?," American Economic Review, American Economic Association, vol. 90(5), pages 1209-1238, December.
    3. Shleifer, Andrei, 2000. "Inefficient Markets: An Introduction to Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780198292272.
    4. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March.
    5. Mirman, Leonard J & Samuelson, Larry & Urbano, Amparo, 1993. "Monopoly Experimentation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 549-563, August.
    6. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    7. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    8. Bonesronning, Hans, 1999. "The variation in teachers' grading practices: causes and consequences," Economics of Education Review, Elsevier, vol. 18(1), pages 89-106, February.
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    Cited by:

    1. Iain Embrey, 2017. "States of Nature and States of Mind: A Generalised Theory of Decision-Making, evaluated by application to Human Capital Development," Working Papers 209919485, Lancaster University Management School, Economics Department.
    2. Koch, Alexander & Nafziger, Julia & Nielsen, Helena Skyt, 2015. "Behavioral economics of education," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 3-17.

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