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Regional development of education as a "coordination game"

Ana Paula Buhse and José Pontes

No 2019/75, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: In this paper, we try to assess the ability of educationally backward countries, such as Portugal, to catch-up with more developed nations withinthe EU. For that purpose,we use a framework composed by a symmetric coordination n person game that is played by a set of candidates to attend a post-compulsory educational degree, such as university. Higher education has a positive payoff only if a "critical mass" (indeed the unanimity)of students with a low socioeconomic background decide to attend the university. Two strict Nash equilibria exist in this game: either all players decide to attend the university or none does it in equilibrium. By using the "risk dominance"approach to the selection of a unique Nash equilibrium that was suggested by HARSANYI and SELTEN (1988), we are able to recognize the factors that make either strict Nash equilibrium the likelysolution. In spite of the progress they have achieved in schooling, structurally lagging countries such as Portugal seem to be hindered in education development by the fact that, in a large majority of households, income is low and parents lack post-compulsory education. While low household income makes the relative cost of university education high even if tuition fees are modest, a small share of highly educated parents makes the achievement of a "critical mass" of students who attend the university more difficult and thus renders the benefits of college education riskier and less safe.

Keywords: Higher Education; Regional Development; Coordination Games; Risk Dominance. (search for similar items in EconPapers)
JEL-codes: C72 I20 O12 R11 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-edu, nep-gth and nep-ure
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