A SIGNALING THEORY OF GRADE INFLATION
When employers cannot tell whether a school truly has many good students or just gives easy grades, a school has incentives to inflate grades to help its mediocre students, despite concerns about preserving the value of good grades for its good students. We construct a signaling model where grades are inflated in equilibrium. The inability to commit to an honest grading policy reduces the efficiency of job assignment and hurts a school. Grade inflation by one school makes it easier for another school to do likewise, thus providing a channel to make grade exaggeration contagious. Copyright 2007 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.
Year of publication: |
2007
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Authors: | Chan, William ; Hao, Li ; Suen, Wing |
Published in: |
International Economic Review. - Department of Economics. - Vol. 48.2007, 3, p. 1065-1090
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Publisher: |
Department of Economics |
Saved in:
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