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The College Admissions Problem Under Uncertainty

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Author Info

  • Hector Chade

    ()
    (Arizona State University)

  • Greg Lewis
  • Lones Smith

Abstract

We consider a college admissions problem with uncertainty. We realistically assume that (i) students' college application choices are nontrivial because applications are costly, (ii) college rankings of students are noisy and thus uncertain at the time of application, and (iii) matching between colleges and students takes place in a decentralized setting. We analyze a general equilibrium model where two ranked colleges set admissions standards for student quality signals, and students, knowing their types, decide where to apply to. We show that the optimal student application portfolio need not be monotone in types, and we construct a robust example to show that this can lead to a failure of assortative matching in equilibrium. More importantly, we prove that a unique equilibrium with assortive matching exists provided application costs are small and the lower-ranked college has sufficiently high capacity. We also provide equilibrium comparative static results with respect to college capacities and application costs. We apply the model to the question of race-based admissions policies

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File URL: http://repec.org/sed2006/up.23343.1138656687.pdf
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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 125.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:125

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Related research

Keywords: matching; directed search; noise;

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References

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  1. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation for Research in Economics, Yale University.
  2. Manolis Galenianos & Philipp Kircher, 2005. "Directed Search with Multiple Job Applications," PIER Working Paper Archive 05-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  3. Shimer, R. & Smith, L., 1998. "Assortive Matching and Search," Papers 98-09, Michigan - Center for Research on Economic & Social Theory.
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Citations

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Cited by:
  1. Lones Smith & Hector Chade, 2004. "Simultaneous Search," 2004 Meeting Papers 25, Society for Economic Dynamics.
  2. Galenianos, Manolis & Kircher, Philipp, 2009. "Directed search with multiple job applications," Journal of Economic Theory, Elsevier, vol. 144(2), pages 445-471, March.
  3. Ennio Bilancini & Leonardo Boncinelli, 2014. "Disclosure of information in matching markets with non-transferable utility," Center for Economic Research (RECent), University of Modena and Reggio E., Dept. of Economics 094, University of Modena and Reggio E., Dept. of Economics.
  4. Christopher Avery & Jonathan Levin, 2010. "Early Admissions at Selective Colleges," American Economic Review, American Economic Association, vol. 100(5), pages 2125-56, December.

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