Here is a small list of alternatives to an exam. Lets assume you are not constrainted by your university to some specific kind of progress. First lets collect some criteria we want:
- Everyone understood the topic should pass the course.
- Good motivated should should pass with a good grade.
- Students who, e.g., only learned some definition by heart, should fail.
- It should be fair in
- At least as possible anxiety should be introduced (that's in fact the question here. Due to my experience, you would only move anxiety to a different point as long as there is a progress with a grade at the end. If you don't call it exam, the students will know it is some kind of anyway.).
- If a question is formulated in a confusing way, there is a chance to ask.
- You can see if someone only learned things by heart or is really thinking about them.
- You can switch to a different topic when there is the impression that the students is really familiar with one topic.
- Not possible for big courses.
- If someone fails, you have to say it into the student's face and you have (exept from maybe one witness) no proof of the bad performance of the student (in a written exam, you can let colleagues look at it). Let's face it: Poor students will normally pass the oral exam.
- The impression depends highly on your actual mood and the order of students. At the end you will maybe grade different than in the beginning.
- You do only grade good ideas. If someone is not able to write down anything, this is not even noticed.
- The questions either differ in difficulty or someone can be prepared for your questions.
Grades from homework
- It does not depend on a one-day performance.
- You can be sure that every topic was somehow included in the grade.
- Everyone has the same questions.
- You cannot ensure that the students have done their homework by their own.
- The grade may depend on the TA, compare this question: How to standardize grading across several sections of a course?.
- Students will bargain for points during the whole course.
- Homework should be there for learning and making mistakes. It is okay (and I also recommend this) to have a threshold being achieved to ensure basic knowledge.
Mixture of written exam, oral exam and homework
Pro: You get a good mixture of the pros above and the Cons above will be weaker since the are mixed.
Con: A lot more work for you and your group.
No grades at all, but a written report
Here, you write down some thoughts about the students relying on your personal view (from the lecture, your office hour), the view of the TA, as well as the homework. This report can be shown to other professors in order to apply for, e.g., a master's thesis. Your university will problably not like this since are should give grades in each course. But interestingly enough: Such a model is used in first grades of elementary school and
when someone is applying for (tenure) academic position. But normally not in between :)
Visiting the group for (half) a day
In a very very small course, it could be a possibility that the students have to visit to group for (half) a day and talk with everyone from the group. After every student was there, the group meeets and decides about grades.
I have never heard of anyone doing this (it takes a lot of time and distracts everyone from working), but a similar method is used when several people are applying for grants and some comitee visits them for a day or more and decides weeks later (This is the procedure at least in Germany).