A coordination game approach to higher education growth

José Pontes

No 2023/0269, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper examines the evoluon of higher educaon in Portugal under the light of an n-person (Stag Hunt) coordinaon game. Such a game exhibits two strict Nash equilibrium points, namely ?when all youngsters decide to work immediately, and ?when they all decide to join a university. Harsanyi and Selten (1988)’s risk dominance concept is used to select the ? Nash equilibrium. We consider two alternave coordinaon requirements in the n – person Stag Hunt, namely unanimity and the k – coordinaon requirement, that allows the university to break even. Even though the unanimity game is formally noncooperave, it represents in fact the result of a cooperave agreement as was emphasized by John Nash (1950, 1953). By contrast, the k – coordinaon game is purely noncooperave and it is driven by efficiency consideraons. By applying these concepts to higher educaon spread across Portuguese regions between 2001 and 2021, we could reach two main conclusions. First, the distribuon of higher educaon across regions seems to be mainly affected by a k – coordinaon constraint, i.e., the share of terary-educated people appears to be higher in densely populated regions where the high fixed costs of seng up a college are more easily covered. Second, public policy appears to be oriented to achieve unanimity in the youngsters’ decisions to join a university by smulang college aendance in sparsely populated regions. Such a policy purpose might make the college system less effecve and limit its expansion in the future.

Keywords: Educaon; Regional Development; Coordinaon Games; Risk Dominance. (search for similar items in EconPapers)
JEL-codes: C72 I20 O12 R11 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-gth
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