Market Power

Musings by an academic economist on the power of markets and the power over markets.

Wednesday, December 08, 2004

How to Upset Students and Drive Home a Point

Here’s a thought experiment to give your students next semester/term (if you are a teacher). Tell them that the score a student gets on the first exam will be the score you’ll put towards that student’s grade. Then tell them that on their second test, each student will get the average score of all students – regardless of how each individual performs.

On which test will students put forth greater overall effort and generate the most overall points? I’d be willing to bet the whole farm (if I owned one!) that they’d do better on the first test.

Besides pissing off your students, you can drive home the point that taxes and transfer payments reduce the incentive to work.

Thanks to my colleague Bob Simonson for the example.