Gary-Bobo, Robert J.; Trannoy, Alain - C.E.P.R. Discussion Papers - 2005
A student's future log-wage is given by the sum of a skill premium and a random personal ‘ability’ term. Students … sorting on the basis of test scores. Students optimally self-select as a result of pricing only. In the absence of …, and can even become negative, if the precision of the university's private assessment of students' abilities is high …