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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
Date of revision:
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. Manolis Galenianos & Philipp A. Kircher, 2005. "Directed Search with Multiple Job Applications," Bonn Econ Discussion Papers bgse20_2005, University of Bonn, Germany.
  2. Shimer, R. & Smith, L., 1997. "Assortative Matching and Search," Working papers 97-2b, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Axel Anderson & Lones Smith, 2006. "Assortative Matching and Reputation," Cowles Foundation Discussion Papers 1553, Cowles Foundation for Research in Economics, Yale University.
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Cited by:
  1. lones smith & hector chade, 2004. "simultaneous search," Econometric Society 2004 North American Summer Meetings 64, Econometric Society.
  2. Manolis Galenianos & Philipp Kircher, 2009. "Directed search with multiple job applications," LSE Research Online Documents on Economics 29702, London School of Economics and Political Science, LSE Library.
  3. Bilancini, Ennio & Boncinelli, Leonardo, 2013. "Disclosure of information in matching markets with non-transferable utility," Games and Economic Behavior, Elsevier, vol. 82(C), pages 143-156.
  4. Christopher Avery & Jonathan Levin, 2009. "Early Admission at Selective Colleges," Discussion Papers 08-031, Stanford Institute for Economic Policy Research.

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