The objective of this paper is to explore an instructor’s incentives to inflate grades in various environments. When setting grade cutoffs in a course, instructors may be motivated by a complex set of factors. For example, promotion may be contingent on attracting sufficient student enrollments, adhering to institutional grading guidelines, and earning high scores on course evaluations that reflect student perceptions of the course's level of difficulty, learning objectives, and value added. Instructors also may care about their reputations (for fairness, honesty, and teaching challenging courses), popularity (which may increase with generous grading), and grading costs (e.g., time spent deliberating before assigning grades, and then explaining and defending such decisions in subsequent conversations). Meanwhile, students have mixed opinions about grade inflation; in general, above-average students prefer to be identified as such, while below-average students would prefer if everyone received an average grade. However, students care not only about grades, but also the employment opportunities that grades generate. When grades matter less than other criteria for landing coveted post-graduation jobs, students become less concerned about grades and consequently, instructors face less pressure to inflate grades.
Game theory is the primary method of analysis, and I consider the differences between scenarios of complete information and asymmetric information. For example, one may assume that classroom examinations are accurate measures or noisy indicators of student mastery of course material. I will present several related games and discuss the various Nash Equilibria.
Preliminary results indicate that an instructor's incentives to inflate grades vary as we change the environment. For instance, an instructor preoccupied with promotion or limiting grading costs has an incentive to assign high grades, anticipating minimal student complaints, whereas an instructor who wants to appear consistent over time may prefer to adhere to a strict grading curve that stops grade inflation. Likewise, the relationship between absolute or relative grades and job opportunities affects an instructor’s decision about grade inflation.
