How to make students honest in exams

One of my favorite economists, David Friedman, suggests an economic solution to a problem that every teacher has probably faced.

In most exams, students have an incentive to respond to a question even if they do not know the answer. If they do not respond at all, they will get zero points with certainty. If they write something – anything – there is some probability that they will get at least a few points, maybe because they guessed the correct answer or because the teacher reads what he or she wants to read.

Pretending to know the answer when you don’t is an economically wasteful activity. It is a waste of time for the student as well as for the teacher who has to grade the exam. It is also, at least potentially, a distortion of the signal embodied in exam grades, because students who pretend to know might do as well on the exam as students who really know.

Friedman’s solution: Award 20 percent of the points for the response “I don’t know”. Students who know less than 20 percent or are less than 20 percent sure that they know the right answer will respond, rationally and honestly, “I don’t know”. Students who know more or are more certain of their knowledge will give their answer.

Now behavioral economists might object that students may be overconfident, i.e. they overestimate their true abilities and give an answer not because they pretend to know, but rather because they truly believe they know. However, even overconfident students – those who, for instance, put the probability that they know the right answer at 50 percent when in fact they don’t know it – might still prefer to answer “I don’t know”, because that guarantees them a certain outcome of 20 percent of the points whereas writing an response they are unsure about means risking losing all the points on the question.

Anyway, I love the solution. I think I will try it in my course. It is also a good example of how simple economics – thinking through the implications of rational behavior – helps solving a non-economic problem.

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