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When grades lose their informative value because the percentage of students receiving the best grade rises without any corresponding increase in ability, this is called grade inflation. Conventional wisdom says that such grade inflation is unavoidable since it is essentially costless to award...
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Should principals explain and justify their evaluations? In this paper the principal's evaluation is private … evaluation to the agent if the evaluation turns out to be bad. The justification assures the agent that the principal has not … distorted the evaluation downwards. In equilibrium, the wage increases in the agent's performance, when the principal justifies …
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