Internalized choice theory: a model of student/faculty choice within the university

Abstract

Initially, the paper examines the alternative analytical frameworks in which previous education studies have been done. More specifically, it examines the "controlled experiment" or dynamic analysis used by psychologist and sociologist, the econometric studies regarding the demand for education, and the traditional labor economics studies which treat human capital like non-human capital. None of these frameworks, however, offer any great insight into the acquisition of such "embodied" education.

To answer such questions, the paper will develop a student/faculty, individual adjustment, comparative statics model. An equilibrium from such an analysis is reached through a sequence of instantaneous adjustments within one time period. The model will use the notion of the "reaction function" (as developed by A. Cournot). The basic assumption behind such an independent adjustment model is that each individual maximizes his own utility on the assumption that the quantity produced by the other is invariant with respect to his own quantity decision (i.e., each individual maximizes his utility with respect to the single variable under his control).

Armed with such a model and its extensions, the following questions can be considered: Are there any gains to trade that can be realized by changing the teacher's lecture time from a purely public good to a purely private good (or vice versa)? What are the long run and short run repercussions from grade inflation? What are the impacts of different student aptitudes and initial endowments of knowledge on student achievement and grades? How would a binding grade constraint affect student behavior? How do faculty and students react to one another with regard to "effort time" and student achievement?