Retaking in High Stakes Exams: Is Less More?
Placement, both in university and in the civil service, according to performance in competitive exams is the norm in much of the world. Repeat taking of such exams is common despite the private and social costs it imposes. We develop and estimate a structural model of exam retaking using data from Turkey's university placement exam. We find that limiting retaking, though individually harmful given the equilibrium, actually increases expected welfare across the board. This result comes from a general equilibrium effect: retakers crowd the market and impose negative spillovers on others by raising acceptance cutoffs.
We thank Pelin Akyol, Peter Kondor and Cemile Yavas for insightful discussions, as well as seminar participants at the Cardiff University, Central European University, University of Exeter, Pompeu Fabra University, University of St. Gallen, Stockholm University and the University of Warwick. Krishna is grateful to the Department of Economics at New York University for support in 2013-14 as a Visiting Professor. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Kala Krishna & Sergey Lychagin & Veronica Frisancho, 2018. "RETAKING IN HIGH STAKES EXAMS: IS LESS MORE?," International Economic Review, vol 59(2), pages 449-477. citation courtesy of