TY - JOUR
T1 - Grading standards and education quality
AU - Boleslavsky, Raphael
AU - Cotton, Christopher
N1 - Copyright:
Copyright 2015 Elsevier B.V., All rights reserved.
PY - 2015
Y1 - 2015
N2 - We consider school competition in a Bayesian persuasion framework. 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. We compare outcomes when schools grade strategically to 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.
AB - We consider school competition in a Bayesian persuasion framework. 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. We compare outcomes when schools grade strategically to 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.
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U2 - 10.1257/mic.20130080
DO - 10.1257/mic.20130080
M3 - Article
AN - SCOPUS:84928891736
VL - 7
SP - 248
EP - 279
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
SN - 1945-7669
IS - 2
ER -