The stupid person, on the other hand, thinks: “As a stupid person, if I take the course, I have a 50% chance of passing and making $60,000 extra, and a 50% chance of failing and making $0 extra. My expected benefit is $30,000, but my expected cost is $50,000. I’ll stay out of school and take the $40,000 salary for non-graduates.”
...assuming that stupid people all know they’re stupid, and that they’re all perfectly rational experts at game theory
And it also pretends that there’s only one employer and that he makes only one hiring decision, and that failing out of college is just as expensive as graduating.
Nitpick:
There’s no game theory in that calculation.
Plus, it pretends college is instantaneous and the benefits of college last one year.
And it also pretends that there’s only one employer and that he makes only one hiring decision, and that failing out of college is just as expensive as graduating.