Student Evaluations and Moral Hazard

Most universities solicit feedback from students at the end of a course in order to assess student perceptions of the course. This feedback is used for various objectives, including for evaluating teaching by academic administrators. One would therefore expect faculty to rationally take this into account while formulating their teaching strategy. In certain cases, such strategic considerations can give rise to moral hazard. I have modelled the situation using the well-known Prisoners Dilemma game and found that in equilibrium, the teaching style will be examination-centric, while considerations of societal good would demand that the teaching style be knowledge-centric. I also discuss the policy implications for this finding.