SYSTEM DESIGN AND CONSUMER BEHAVIOR IN ELECTRONIC COMMERCE Hanushek cautions: If the efficiency of our school systems is due to poor incentives for teachers and administrators coupled with poor decisionmaking by consumers, it would be unwise to expect much from programs that seek to strengthen market forces in the selection of schools, (1981, p. 34-35; emphasis added). Moreover, if students outcomes depend importantly on the characteristics of their classmates (. if so-called peer effects are important components of educational production), even rational, fully informed, test-score-maximizing parents may prefer schools with poor management but desirable peer groups to better managed competitors that enroll less desirable students, and administrators may.
