Efficient tuition fees and examinations: A reply

Gary-Bobo and Trannoy (2008) assume that students observe a private noisy signal of their ability while university gets information through noisy tests. They derive that a selection of potential applicants mixing tuition fees and examinations is socially optimal when the information owned by the university is not completely revealed to students. If tests results are public knowledge, they deduce that tuition fees alone can lead to an optimal degree of student self-selection. In this article, we propose to consider a more realistic assumption, taking into account the heterogeneity of the population. Indeed, due to this heterogeneity, a part of the population has a biased perception of its own skills, leading to an underestimation of the capabilities to succeed in a higher education system. We show that this new assumption may lead to rather different conclusions. In particular, we derive that optimal tuition fees are lower than those obtained by Gary-Bobo and Trannoy (2008) for an homogeneus population, given the