Working In the Firm’s Best Interest
Each year, public schools are rewarded with bigger budgets for achieving a rating of “excellent“ or “recommended“ and are punished for rating “ needs improvement“.Theseratings are based on meeting thresholds on a broad set of measures such as attendance rates, graduation rates, standardized test scores, SAT scores, and so on. Discuss the incentives for school principals (who are the agents, in this case) under this scheme and how you might improve them.
Answer preview
Funding for schools is a very controversial topic in the education industry. Governments have in the past been able to come up with systems that allow them to allocate funds to different schools based on various factors. In this case, funds are allocated to schools based on the overall performance that a school gets in a specific educational year. The educational achievement compared to the other schools in the region is what determines the total funding that the school with receive. The incentive, in this case, is the money that the principal gets to run the operations of the school as well as contribute to the development of the school…
(350 words)