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Early decision and financial aid competition among need-blind colleges and universities

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  • Kim, Matthew
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    Abstract

    This paper presents a stylized theoretical model of competition among need-blind colleges and universities that implement early decision admissions. Under need-blind admissions, an applicant's financial aid status cannot affect their likelihood of admission. In the model, a need-blind school can use early decision admissions as a screening mechanism to indirectly identify a student's ability-to-pay, while superficially maintaining a need-blind policy. As a result, in equilibrium, non-financial aid students are more likely to be admitted than financial aid students of comparable quality.

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    File URL: http://www.sciencedirect.com/science/article/B6V76-4Y95RGM-1/2/6168da653299cd6f9ec541d482c4fb1f
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Public Economics.

    Volume (Year): 94 (2010)
    Issue (Month): 5-6 (June)
    Pages: 410-420

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    Handle: RePEc:eee:pubeco:v:94:y:2010:i:5-6:p:410-420

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    Web page: http://www.elsevier.com/locate/inca/505578

    Related research

    Keywords: Early decision Financial aid Need-blind admissions;

    References

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    1. Dennis Epple & Richard Romano & Holger Sieg, 2002. "On the Demographic Composition of Colleges and Universities in Market Equilibrium," American Economic Review, American Economic Association, vol. 92(2), pages 310-314, May.
    2. Hill, Catharine B. & Winston, Gordon C., 2006. "Access: Net prices, affordability, and equity at a highly selective college," Economics of Education Review, Elsevier, vol. 25(1), pages 29-41, February.
    3. Gordon C. Winston, 1997. "Why Can't a College be More Like a Firm?," Williams Project on the Economics of Higher Education DP-42, Department of Economics, Williams College.
    4. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-29, June.
    5. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-86, June.
    6. Dennis Epple & Richard Romano & Holger Sieg, 2003. "The Practice and Proscription of Affirmative Action in Higher Education:An Equilibrium Analysis," NBER Working Papers 9799, National Bureau of Economic Research, Inc.
    7. Carl Davidson & Raymond Deneckere, 1986. "Long-Run Competition in Capacity, Short-Run Competition in Price, and the Cournot Model," RAND Journal of Economics, The RAND Corporation, vol. 17(3), pages 404-415, Autumn.
    8. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
    9. Dennis Epple & Richard Romano & Holger Sieg, . "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," GSIA Working Papers 2003-04, Carnegie Mellon University, Tepper School of Business.
    10. Catharine B. Hill & Gordon C. Winston & Stephanie A. Boyd, 2005. "Affordability: Family Incomes and Net Prices at Highly Selective Private Colleges and Universities," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 769-790.
    11. Winston, G.C., 2000. "The Positional Arms Race in Higher Education," Williams Project on the Economics of Higher Education DP-54, Department of Economics, Williams College.
    12. Ronald G. Ehrenberg & Daniel R. Sherman, 1984. "Optimal Financial Aid Policies for a Selective University," NBER Working Papers 1014, National Bureau of Economic Research, Inc.
    13. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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    Citations

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    Cited by:
    1. Christopher Avery & Jonathan D. Levin, 2009. "Early Admissions at Selective Colleges," NBER Working Papers 14844, National Bureau of Economic Research, Inc.
    2. Chapman, Gabrielle & Dickert-Conlin, Stacy, 2012. "Applying early decision: Student and college incentives and outcomes," Economics of Education Review, Elsevier, vol. 31(5), pages 749-763.
    3. Chen, Wei-Cheng & Kao, Yi-Cheng, 2014. "Simultaneous screening and college admissions," Economics Letters, Elsevier, vol. 122(2), pages 296-298.
    4. Dennis Epple & Richard Romano & Sinan Sarpça & Holger Sieg, 2013. "The U.S. Market for Higher Education: A General Equilibrium Analysis of State and Private Colleges and Public Funding Policies," NBER Working Papers 19298, National Bureau of Economic Research, Inc.
    5. Van Kolpin & Mark Stater, 2013. "The Real Deal? Information Asymmetries and Tuition Discounting in Higher Education," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 5(2), pages 190-212, December.

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