Microeconomics: Question 2- Public Goods and Common Resources I?
January 27, 2010 by
Filed under class registration system
6. Suppose your economics professor decides to conduct an experiment regarding the effects of different grading policies on the class average. He plans to teach two sections of the same economics course next semester. In each class, an exam score of 90 or above is an A, a score of between 80 and 90 is a B, and so forth. To determine the number for the exam score, the professor uses two different systems. In one class, each student will receive the number that he or she scores on the final exam. In the other class, each student will receive a number equal to the average score on the exam for the entire class. All students know the grading policies at the time of registration and students can choose which class they attend.
True or False: Assume that both classes have large enrollments. The class with the higher average grade is likely to be the one in which students receive their own numerical score on the exam.
A. True
B. False
True. As you know, economics is all about incentives. When students get graded on individual behavior, the incentive to prepare for the final is large. After all, each student is aware that if he or she gets a couple extra questions right, his grade may go up 5 points or so. (I don’t know how long the final is, but the point is just that each wrong answer results in a noteworthy change in grade.)
In the other class, the penalty for a wrong answer is reduced greatly. In a class comprised of dozens of students, if one person gets a few extra questions wrong because of lack of preparedness, the average grade may be influenced by less than a point. Essentially, the class in which everybody determines his or her own grade will have a higher overall GPA because there is a larger incentive to prepare for the exam.