The two-stage exam is a relatively simple way to introduce collaborative learning and formative assessment into an exam. Their use is rapidly growing in the physics department at the University of British Columbia, as both students and faculty find them rewarding. In a two-stage exam students first complete and turn in the exam individually, and then, working in small groups, answer the exam questions again. During the second stage, the room is filled with spirited and effective debate with nearly every student participating. This provides students with immediate targeted feedback supplied by discussions with their peers. Furthermore, we see indications that the use of this exam format not only ensures consistency across interactive course components, but it also positively impacts how students approach the other collaborative course components. This is accomplished without losing the summative assessment of individual performance that is the expectation of exams for most instructors. In this paper we describe how to implement two-stage exams and provide arguments why they should be part of physics courses that use interactive engagement and social/collaborative learning methods.

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