This is a classic case of incentives positively encouraging unacceptable behaviour.
In England, there are very strong incentives for schools to have as many students as possible get at least a Grade "C" in the English GCSE exam. In interviews of about 100 schools, Ofqual's press release reported:
"While no school interviewed considered that it was doing anything untoward in teaching and administering these GCSEs, many expressed concern that other nearby schools were overstepping the boundaries of acceptable practice.
The report states: “The pattern of marks – the unprecedented clustering around perceived grade boundaries for each whole qualification – is striking”."Cheating is far more widespread than you think. We don't recognise much cheating because we rationalise it into 'normal' or 'acceptable' behavour.
Dan Ariely, a behavioural psychologist/economist, has made a special study of the subject. He has summarised the core of his findings in an entertaining short RSA Animate. For more read his book "The (honest) truth about dishonesty". It should be compulsory reading for business leaders and regulators.
So watch out! Teachers are far from the only people who cheat! Most people do it to levels they rationalise as 'acceptable'. But there's no need to design incentives that positively encourage cheating.