Updated Expectations and College Application Portfolios

Economists have a limited understanding of how sensitive human capital investment is to information about aptitude or likelihood of success. We shed light on this by estimating if students update their college choices in response to large positive and negative information shocks generated by the release of SAT scores. Using new data on when students select colleges to receive their scores, we find that positive shocks cause students to choose more selective colleges that charge higher tuition and have higher graduation rates. Updating is significant for students from high and low income households and for minority and non-minority students.