On the dynamics of quality student enrollment at institutions of higher education

Academic institutions seeking excellence attract good students through reputation. How high should their academic level be set? Suppose that teaching seeks to maximize aggregate discounted student achievement, while reputation deducts from this the risk of student failure. The inter-temporal optimal policy (a) tailors academic objectives and standards to maximize the achievement of its current students; (b) optimizes achievement using as many instruments as possible, such as individual teaching, tutorials, teaching according to skill; (c) minimizes the costs of these policies for students. In an illustrative empirical study we find that the SAT levels of attracted students follow a convergent process as predicted, with graduation rates, expenditure and reputation combining to attract better future students. (C) 2002 Elsevier Science Ltd. All rights reserved.