Grading Standards and Education Quality

43 Pages Posted: 5 Jun 2013 Last revised: 30 Jul 2014

See all articles by Raphael Boleslavsky

Raphael Boleslavsky

University of Miami - School of Business Administration - Department of Economics

Christopher Cotton

Queen's University, Department of Economics

Date Written: June 15, 2014

Abstract

We consider a game in which 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 (including employers and graduate schools). We compare equilibrium outcomes when schools grade strategically to equilibrium 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.

Keywords: Grade inflation, Bayesian persuasion, education quality

Suggested Citation

Boleslavsky, Raphael and Cotton, Christopher, Grading Standards and Education Quality (June 15, 2014). Available at SSRN: https://ssrn.com/abstract=2274210 or http://dx.doi.org/10.2139/ssrn.2274210

Raphael Boleslavsky

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States

Christopher Cotton (Contact Author)

Queen's University, Department of Economics ( email )

Dunning Hall 230
Kingston, Ontario K7L 3N6
Canada

HOME PAGE: http://https://sites.google.com/site/cscotton

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