Ozdagli, Ali K.; Trachter, Nicholas - Istituto Einaudi per l'Economia e la Finanza (EIEF) - 2011
We present a dynamic model of college education where the students face uncertainty about their income stream after graduation due to unobserved heterogeneity in their innate scholastic ability. As students write exams, they reevaluate their expectations and may find it optimal to drop out and...