Using Portfolio Theory to Design Better Exams

32 Pages Posted: 12 Aug 2019

See all articles by Ehsan Ardjmand

Ehsan Ardjmand

Ohio University

David L. Stowe

Ohio University; Ohio University - College of Business; Ohio University - Department of Finance

John D. Stowe

Ohio University

Date Written: August 8, 2019

Abstract

The mathematics behind many psychometric measures is similar to the mathematics in portfolio theory. Faculty often build exams based on judgment and experience and only use psychometric tools after an exam is administered. An obvious question is, can portfolio optimization models be used to design exams with desirable psychometric outcomes and content coverage? Although underlying variables (stock returns versus exam question scores) differ fundamentally, a portfolio approach to exam development can be used. The objective functions and underlying constraints will differ, but many faculty can readily apply the principles of portfolio theory to design more optimal exams. In this paper we contrast the objectives and mechanics of portfolio and exam development and use an integer programming model to develop the optimal set of exam questions given a realistic example.

Keywords: Exam Development, Portfolio Theory, Psychometric Analysis, Portfolio Performance, Test Analysis, Integer Programming

JEL Classification: G110

Suggested Citation

Ardjmand, Ehsan and Stowe, David L. and Stowe, John D., Using Portfolio Theory to Design Better Exams (August 8, 2019). Available at SSRN: https://ssrn.com/abstract=3434422 or http://dx.doi.org/10.2139/ssrn.3434422

Ehsan Ardjmand

Ohio University ( email )

Athens, OH 45701-2979
United States

David L. Stowe

Ohio University ( email )

Athens, OH 45701-2979
United States

Ohio University - College of Business ( email )

Athens, OH 45701-2979
United States

Ohio University - Department of Finance ( email )

640 Copeland
Athens, OH 45701
United States

John D. Stowe (Contact Author)

Ohio University ( email )

640 Copeland
Athens, OH 45701
United States
(434) 409-0239 (Phone)

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