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

  • Andreas Ortmann
  • Sergey Slobodyan

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.

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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp355.

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Date of creation: Jun 2008
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Handle: RePEc:cer:papers:wp355
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  1. 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 - Economic Institute, Prague.
  2. Harald Uhlig & Martin Lettau, 1999. "Rules of Thumb versus Dynamic Programming," American Economic Review, American Economic Association, vol. 89(1), pages 148-174, March.
  3. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
  4. Robert Tamura, 2001. "Teachers, Growth, and Convergence," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1021-1059, October.
  5. Marco Valente and Esben Sloth Andersen, . "A hands-on approach to evolutionary simulation: Nelson and Winter models in the Laboratory for Simulation Development," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  6. Gerard Weisbuch & Alan Kirman & Dorothea Herreiner, 1995. "Market Organization," Working Papers 95-11-102, Santa Fe Institute.
  7. Marco Valente, 1998. "Laboratory for Simulation Development," DRUID Working Papers 98-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  8. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  9. Marco Valente, . "Comments on the paper Equilibrium Selection via Adaptation: Using Genetic Programming to Model Learning in a Coordination , by Chen, Duffy and Yeh," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  10. Shu-Heng Chen, John Duffy, Chia-Hsuan Yeh, . "Equilibrium Selection via Adaptation: Using Genetic Programming to Model Learning in a Coordination Game," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV.
  11. Vriend, Nicolaas J, 1995. "Self-Organization of Markets: An Example of a Computational Approach," Computational Economics, Society for Computational Economics, vol. 8(3), pages 205-31, August.
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