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Competitive screening and information transmission

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Abstract

We consider a model in which schools and colleges compete for high‐ability students, which are independently identified through a costly screening procedure. This independence creates a channel through which students' preferences affect the strategic interaction between schools: students with competing offers accept the most‐preferred one, increasing the screening costs of unpopular schools. When preferences between schools are more heterogeneous, schools screen more, increasing the proportion of students with multiple offers, but paradoxically reducing the extent to which their preferences determine their outcomes. By observing the students' schools of origin, colleges can free‐ride of the fierce competition that occurs during screening.

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  • Inácio Bó & Chiu Yu Ko, 2021. "Competitive screening and information transmission," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(3), pages 407-437, June.
    • Handle: RePEc:bla:jpbect:v:23:y:2021:i:3:p:407-437
    DOI: 10.1111/jpet.12489
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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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