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

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  • Andreas Ortmann
  • Sergey Slobodyan

Abstract

We propose a computational model to study (the evolution of) post-secondary education. “Consumers” who differ in quality shop around for desirable colleges or universities. “Firms” that differ in quality signal the availability of their services to desirable students. As long as they have capacity, colleges and universities make offers to students, who apply and qualify. Our model generalizes an earlier literature (namely, Vriend 1995) in an important dimension: quality, the model confirms key predictions of an analytical model that we also supply, and the model allows us to systematically explore the emergence of macro regularities and the consequences of various strategies that sellers might try. We supply three such exercises. In our baseline treatment we establish the dynamics and asymptotics of our generalized matching model. In the second treatment we study the consequences of opportunistic behavior of firms and thus demonstrate the usefulness of our computational laboratory for the analysis of this or similar questions (e.g., the problem of early admission). In the third treatment we equip some firms with economies of scale. This variant of our matching model is motivated by the entry of for-profit providers into low-quality segments of post-secondary education in the USA and by 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 curricular design, 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, albeit not necessarily all the way up to the top.

Suggested Citation

  • Andreas Ortmann & Sergey Slobodyan, 2008. "(The Evolution of) Post-Secondary Education: A Computational Model and Experiments," CERGE-EI Working Papers wp355, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp355
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    References listed on IDEAS

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    9. 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 - Economics Institute, Prague.
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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 - Economics 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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    More about this item

    Keywords

    Post-secondary education; for-profit higher education providers; computational simulations.;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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