Popov, Sergey V. and Bernhardt, Dan (2010): University Competition, Grading Standards and Grade Inflation.
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We develop a model of strategic grade determination by universities distinguished by their distributions of student academic abilities. Universities choose grading standards to maximize total wages of graduates. Job placement and wages hinge on a ﬁrm’s productivity assessment given a student’s university, grade and productivity signal. We identify conditions under which better universities set lower grading standards, exploiting the fact that ﬁrms cannot distinguish between “good” and “bad” “A”s. In contrast, a social planner sets stricter standards at better universities. We show how increases in skilled jobs drive grade inﬂation, and determine when grading standards fall faster at better schools.
|Item Type:||MPRA Paper|
|Original Title:||University Competition, Grading Standards and Grade Inflation|
|Keywords:||grading standards; grading inﬂation; information|
|Subjects:||I - Health, Education, and Welfare > I2 - Education and Research Insititutions > I21 - Analysis of Education|
|Depositing User:||Sergey Popov|
|Date Deposited:||05. Nov 2010 21:11|
|Last Modified:||12. Feb 2013 15:44|
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