Grading standards and education quality

Raphael Boleslavsky, Christopher Cotton

Research output: Contribution to journalArticle

12 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)248-279
Number of pages32
JournalAmerican Economic Journal: Microeconomics
Volume7
Issue number2
DOIs
StatePublished - 2015

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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