Monthly Archives: July 2015

Coordination game in choosing a university

The ranking of universities is very stable over time ( regardless of the difference in resources, scandals and other factors affecting popularity and quality. There are several positive feedback mechanisms keeping the rankings constant. These come from the multiple coordination games when choosing a university.
1) Smart and hardworking students want to be together with other smart and hard workers. If for some reason the best are in one location, then in the future all the best people have a motive to go to the same place. So the best arrive at that location and help attract other best people in the future. Similarly, party animals want to go to a university famous for its parties, and if many party animals come to a university, then it becomes famous for its parties.
Why would smart people want to be together with other intelligent folks? Just for interesting conversation, for useful contacts, collaboration. For these reasons, even the stupid may want to be together with the smart. Then an assortative matching results, as Gary Becker predicted for the marriage market (
2) Students want to go to a school with the best teaching staff, and the best professors want to teach the best students. I have yet to hear anyone wish for stupider students or teachers for themselves. Again the preference is the same among smarter and stupider students and professors, so assortative matching is a reasonable prediction.
3) The best professors want to be with other similar ones. Where there are such people, more will arrive.
4) Smarter graduates are likely to earn more and can donate more to the university. Then the university can hire better teaching staff, which in turn attracts better students, who donate more… The more talented also accumulate more power after graduating, in government institutions for example, which they can use (legally or not) to benefit their alma mater. Predicting this, again many people want to go there, and in the stiff competition the best get in.
5) If the employers believe that from some place, more intelligent people come than from elsewhere, then they are ready to make better offers to those coming from there. This makes the place attractive to all future employee candidates. Due to competition, the best get in, which justifies the belief of the employers.
6) Smarter people can be taught faster, at a pace that the stupider cannot keep. This mechanism gives everyone a motive to go to a school corresponding to their level.
7) Faster teaching means more knowledge during a standard length higher education, which the employers should value. The graduates of a school giving more knowledge are favoured, which makes the place attractive to everyone and leads to only the best getting in. The ability of the average student remains high, which enables faster teaching.

Smarter people have a comparative advantage in theory

Theory research requires figuring out the result and how to prove it, and then writing these down. Empirical research requires the same, plus running the experiment or analyzing the data in order to prove the result. This requires relatively more time and less insight. If the production function of empirics requires in its input mix more time per unit of insight than the production function of theory, then smarter people have a comparative advantage in theory. They are endowed with more insight, but everyone has the same amount of time.
The amounts of theory and empirical research produced per unit of insight need not be related in any way for the above comparative advantage result.
Based on comparative advantage, I should switch to empirical research 🙂
Some empirical research methods are quite simple, but modern theory requires complicated math. Due to this, empirical research requires more time per unit of methods knowledge in its input mix. People with a stronger methodological background (better education) thus have a comparative advantage in theory. This suggests graduates of universities with more (advanced) coursework should be more likely to do theory.