The students' grade scaling dilemma

One of the sad things about teaching online is that I miss out on some of the more interesting conversations with students. I can almost never anticipate some of the truly interesting questions they come up with, and many of them unfortunately cannot be answered with the simple tools of introductory economics. Sometimes though, they can. Consider this example (paraphrased from a real question I was asked recently, but not by a current student of mine): If every paper is going to have its grades scaled to match past semesters, why should anyone do any of the coursework at all?

First, some context. The COVID-19 crisis has caused considerable disruption to university teaching, and the move to teaching and learning online has without doubt disadvantaged many students. There is justifiable concern that students' grades will be negatively affected. Some universities will be automatically scaling up all grades (e.g. University of Auckland). At Waikato, our Vice-Chancellor has announced that there will be no automatic scaling, but individual grades, and grade distributions for papers, will be compared with past trimesters, and adjusted to ensure they compare fairly with those past trimesters.

Now, as a student, if you know that grades will be scaled, then the incentive for you to work hard are lowered somewhat. Now think about the incentives for the class as a whole. If you could coordinate with all of the other students in your class as a 'cooperative', you could all agree to do no coursework at all. At the end of the trimester, you would all have your grades scaled up. And since the grade distribution needs to be similar to past years, most students in the cooperative would pass, without having to do any work at all.

So, why won't this happen? This is essentially an example of the prisoners' dilemma from game theory (see here for another example). The problem for the student cooperative is that the social incentive (to work together, do no coursework, and be scaled into a passing grade) doesn't match the private incentive. The private incentive for each student is to work slightly harder than the students in the cooperative, so that after the scaling you are at the top of the distribution, and get an easy A+ grade.

In fact, working slightly harder is a dominant strategy - it makes you better off if all of the other students do no coursework (since you get an easy A+), and it makes you better off if all the other students work slightly harder as well (since otherwise you fall behind and drop down the grade distribution, and are at risk of failing even after the grades are scaled). [*]

So, no student would agree to join the 'no-coursework cooperative', unless they could be sure that every other student would join as well. And no student could trust the other students to follow through on the cooperative, since every one of them could get an easy A+ by working slightly harder.

Cooperation is hard. As I note in my ECONS101 class, it requires trust between the players. And trust usually requires developing a reputation for being trustworthy. Unless you know the other students in your class really well, you probably have no reason to trust that they will follow through on a no-coursework agreement.

And so, that's why students should continue to do some coursework.

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[*] This doesn't quite extend to a strategy of 'working crazy hard' being a dominant strategy, because at some point the costs of increasing how hard you work on a paper begin to outweigh the benefits of doing so. We could easily make this much more complicated than necessary, so let's stick to two strategies - 'doing no coursework', and 'working slightly harder'.