“…4 One set of papers uses proxy variables to break the link between unobserved and peer ability (Arcidiacono and Nicholson (2005), Hanushek, Kain, Markman, and Rivkin (2003), and Betts and Morell (1999)). Another set of papers relies on some form of random assignment (Sacerdote (2001), Zimmerman (2003), Winston and Zimmerman (2003), Foster (2006), Lehrer and Ding (2007), Carrell and Hoekstra (2010), Carrell, Fullerton, andWest (2009), Carrell, West, andMalmstrom (2008), and Hoxby (2001)). Finally, researchers have tried to circumvent the endogeneity problem with instrumental variables (Evans, Oates, and Schwab (1992)).…”