The fact that profs don’t give all A’s, even though they can, is interesting to me. My explanation for this behavior is as follows: college professors typically got high grades themselves in college. Getting high grades is part of how we defined ourselves when we were students. So, now that we’re giving out the grades, we don’t want to devalue this currency. It’s not a matter of self-interest–if I give out a bunch of A’s to my students, it’s not going to retroactively tarnish my college grade-point average. Rather, I think it’s just that profs see grades as important in themselves. Sort of like rich people who don’t want to debase the currency, just as a matter of principle.
I'm not sure about this explanation as a general rule, but I don't think it's true across the board. However, almost none of my profs have inflated and that makes me wonder if I've had all jerks...I remember looking at grading records for undergraduate classes back when I taught at Berkeley in the early 1990s. There was lots of variation in average grades by instructor, even for different sections of the same class. I didn’t do a formal study, but I remember when flipping through the sheets that average grade seemed to be correlated with niceness. The profs who were generally pleasant people tended to give lots of A’s, while the jerks were giving lower grades."