Wednesday, August 29, 2007

Responding to Incentives

Greg Mankiw talks about how American Universities respond positively to incentives, just like anybody else -
Looking at the new rankings reminded me of a conversation I had with a teacher at a mid-ranked university a few years. He explained to me that all classes of introductory econ at his school were, without exception, capped at 49 students. Why such an odd number?, I asked. He explained that the US News ranking penalizes schools based on the percentage of classes with 50 or more students. Deans, like all people, respond to incentives.
Perhaps there's a lesson out there for Indian Business schools especially the younger IIMs.
It is a widely held view that LIK (IIMs Lucknow, Indore and Kozhikode for the uninitiated) often get a raw deal in the Business school rankings. The indignation is perhaps justified. But I'm not sure whether smugly not participating in surveys is the right way to go. Haven't given much thought to this. Do post your views :)



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