Optimal School Design

• Department of Economics

Jacopo Bizzotto, Oslo Business School, presents “Optimal School Design”

We consider a population of students with heterogeneous socioeconomic status, and study the dual design problem of allocating students to schools and choosing how to grade students in school. We fully characterize the welfare-maximizing school design, which exhibits: (a) stratification, (b) a positive relationship between grade inflation and school rank, (c) coarse sorting. We go on to show that the ability to strategically misreport socioeconomic status benefits students at the top of the ladder and reduces welfare of those at the bottom.

co-author: Adrien Henri Vigier, University of Nottingham