Pass/Fail, A-F, or 0-100? - Optimal Grading of Eager Students

Lilo Wagner

No 1445, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper analyzes optimal grading in a world that focuses on top grades. Students choose an effort level, their performance is graded, and their grade correlates with their future income. Ex-ante, the policy maker chooses the optimal coarseness of the grading scale to maximize student welfare. When choosing their effort, students overweight outstanding { or salient { grades. I show that this behavior leads to excessive effort levels when grading is fully informative, and that coarse grading can be used to counterbalance incentives. Thus, salience can help explain why grading ranges from Pass/Fail scales (tenure decisions) via A-F-scales (school) to fully disclosing scores (e.g. SAT).

Keywords: Optimal grading; effort incentives; salience theory; education (search for similar items in EconPapers)
JEL-codes: D81 D83 I21 (search for similar items in EconPapers)
Pages: 26 p.
Date: 2015
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.diw.de/documents/publikationen/73/diw_01.c.495800.de/dp1445.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp1445

Access Statistics for this paper

More papers in Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Bibliothek ().