We consider a game in which schools compete to place graduates by investing in education quality and by choosing grading policies. In equilibrium, schools strategically adopt grading policies that do not perfectly reveal graduate ability to evaluators (including employers and graduate schools)....

This paper contributes to the literature on the effectiveness of schools. The analysis is unique in five respects. First, the data employed include the minutes of instruction per five day week in each of four subjects for all the public schools in Illinois. Few education production function...