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...

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...

We present a theory explaining the impact of ability tracking on academic performance based on grading policies. Our model distinguishes between initial ability, which is mainly determined by parental background, and eagerness to extend knowledge. We show that achievements of low ability...

We present a theory explaining the impact of ability tracking on academic performance based on grading policies. Our model distinguishes between initial ability, which is mainly determined by parental background, and eagerness to extend knowledge. We show that achievements of low ability...

This paper presents a model showing an incentive for a group of people to vote for higher tuition fees, even if these fees have no quality effect. The incentive is based on a non-monetary influence on utility, namely the social status or prestige of graduating. The basic assumption is that the...

Quasi‐hyperbolic discounted preferences imply that consumers overemphasize immediate current rewards and overlook future ones (they have a “bias for the present”). Within this context the literature has emphasized that the misalignment between immediate and future rewards can be rectified...

In this paper, citizens vote in order to influence the election outcome and in order to signal their unobserved characteristics to others. The model is one of rational voting and generates the following predictions: (i) The paradox of not voting does not arise, because the benefit of voting does...

A model is presented where universities competitively supply education to mobile students. Students are subject to a liquidity constraint so that tuition must be paid out of pre-university income. It is shown that student loans provided by home jurisdictions will ensure an efficient quality of...

Conventional wisdom has it that policy innovation is better promoted in a federal rather than in a unitary system. Recent research, however, has provided theoretical evidence to the contrary: a multi-jurisdictional system is characterized - due to the existence of a horizontal information...