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Full-Text Articles in Social and Behavioral Sciences
A Signaling Theory Of Grade Inflation, William Chan, Hao Li, Wing Suen
A Signaling Theory Of Grade Inflation, William Chan, Hao Li, Wing Suen
hao li
When employers cannot tell whether a school truly has many good students or just gives easy grades, schools have an incentive to inflate grades to help mediocre students, despite concerns about preserving the value of good grades for good students. We construct a signaling model where grades are inflated in equilibrium. The inability to commit to an honest grading policy reduces the informativeness of grades and hurts schools. Grade inflation by one school makes it easier for another school to fool the market with inflated grades. Easy grades are strategic complements, providing a channel to make grade exaggeration contagious.
Price Discrimination And Efficent Matching , Ettore Damiano, Hao Li
Price Discrimination And Efficent Matching , Ettore Damiano, Hao Li
hao li
This paper considers the problem of a monopoly matchmaker that uses a schedule of entrance fees to sort different types of agents on the two sides of a matching market into different markets, where agents randomly form pairwise matches. We make the standard assumption that the match value function exhibits complementarities, so that matching types at equal percentiles maximizes total match value. We provide necessary and sufficient conditions for the revenue-maximizing market structure to be efficient. These conditions require complementarities in the match value function to be sufficiently strong along the efficient matching path.
Competing Matchmaking, Ettore Damiano, Hao Li
Competing Matchmaking, Ettore Damiano, Hao Li
hao li
We study how matchmakers use prices to sort heterogeneous participants into competing matching markets, and how equilibrium outcomes compare with monopoly in terms of prices, matching market structure and sorting efficiency under the assumption of complementarity in the match value function. The role of prices to facilitate sorting is compromised by the need to survive price competition. We show that price competition leads to a high quality market that is insufficiently exclusive. As a result, the duopolistic outcome can be less efficient in sorting than the monopoly outcome in terms of total match value in spite of servicing more participants.
Competing For Talents, Ettore Damiano, Hao Li, Wing Suen
Competing For Talents, Ettore Damiano, Hao Li, Wing Suen
hao li
Though individuals prefer to join groups with high quality peers, there are advantages to being high up in the pecking order within a group if higher ranked members of a group have greater access to the group's resources. When two organizations try to attract members from a fixed population of heterogeneous agents, how resources are distributed among the members according to their rank affects how agents choose between the organizations. Competition between the two organizations has implications for both the equilibrium sorting of agents and the way resources are distributed within each organization. To compete more intensely for the more …