Advanced seminar in Economics - Antonio Cabrales (Universidad Carlos III de Madrid)

In this paper we develop a model that allows to understand the circumstances under which a society, or groups within a society, may decide to pursue a collaborative education model or an individualist one. One important aspect of our model is that there are externalities and it can feature multiple equilibria. We can thus explain why one observes different local educational cultures even within relatively homogeneous countries. In addition, both features generate important and subtle insights for public policies. Depending on the parameters, the policymakers may need to operate “only” on beliefs, or they may need to change parental and teachers’ abilities. We study the incentives and possible policy responses to a desire for segregation.