> In another approach, the exam is supposed to challenge the students. When I was undergrad, you only needed 80-85% of available points for the highest grade.

I've seen a system where they grade on a curve, A is 4.0. But there's A*, which still gives a 4.0 on the transcript, but denotes that a student (or a group) were statistically far enough from those who got an A that they deserved special recognition (ie, the threshold for an A is 85% but someone managed to score a 98%).