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College admissions with entrance exams: Centralized versus decentralized

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  • Hafalir, Isa E.
  • Hakimov, Rustamdjan
  • Kübler, Dorothea
  • Kurino, Morimitsu

Abstract

We study a college admissions problem in which colleges accept students by ranking students' efforts in entrance exams. Students' ability levels affect the cost of their efforts. We solve and compare equilibria of “centralized college admissions” (CCA) where students apply to all colleges and “decentralized college admissions” (DCA) where students only apply to one college. We show that lower ability students prefer DCA whereas higher ability students prefer CCA. Many predictions of the theory are supported by a lab experiment designed to test the theory, yet we find a number of differences that render DCA less attractive than CCA compared to the equilibrium benchmark.

Suggested Citation

  • Hafalir, Isa E. & Hakimov, Rustamdjan & Kübler, Dorothea & Kurino, Morimitsu, 2018. "College admissions with entrance exams: Centralized versus decentralized," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 176, pages 886-934.
    • Handle: RePEc:zbw:espost:209667
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    Cited by:

    1. Klijn, Flip & Pais, Joana & Vorsatz, Marc, 2019. "Static versus dynamic deferred acceptance in school choice: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 113(C), pages 147-163.
    2. Carvalho, José-Raimundo & Magnac, Thierry & Xiong, Qizhou, 2016. "College Choice and the Selection of Mechanisms: A Structural Empirical Analysis," IWH Discussion Papers 3/2016, Halle Institute for Economic Research (IWH).
    3. Aue, Robert & Klein, Thilo & Ortega, Josué, 2020. "What happens when separate and unequal school districts merge?," ZEW Discussion Papers 20-032, ZEW - Leibniz Centre for European Economic Research.
    4. YingHua He & Thierry Magnac, 2022. "Application Costs and Congestion in Matching Markets," The Economic Journal, Royal Economic Society, vol. 132(648), pages 2918-2950.
    5. Somouaoga Bonkoungou, 2021. "Decentralized college admissions under single application," Review of Economic Design, Springer;Society for Economic Design, vol. 25(1), pages 65-91, June.
    6. TANAKA Mari & NARITA Yusuke & MORIGUCHI Chiaki, 2020. "Meritocracy and Its Discontent: Long-run Effects of Repeated School Admission Reforms," Discussion papers 20002, Research Institute of Economy, Trade and Industry (RIETI).
    7. Christopher Avery & Soohyung Lee & Alvin E. Roth, 2014. "College Admissions as Non-Price Competition: The Case of South Korea," NBER Working Papers 20774, National Bureau of Economic Research, Inc.
    8. Andersson, Tommy & Dur, Umut & Ertemel, Sinan & Kesten, Onur, 2018. "Sequential School Choice with Public and Private Schools," Working Papers 2018:39, Lund University, Department of Economics, revised 31 Oct 2023.
    9. Carvalho, José-Raimundo & Magnac, Thierry, 2016. "Survey on aspiration and expectations of high school students," TSE Working Papers 16-627, Toulouse School of Economics (TSE).
    10. Taro Kumano & Morimitsu Kurino, 2022. "Quota Adjustment Process," Keio-IES Discussion Paper Series 2022-016, Institute for Economics Studies, Keio University.
    11. Machado, Cecilia & Szerman, Christiane, 2016. "Centralized Admission and the Student-College Match," IZA Discussion Papers 10251, Institute of Labor Economics (IZA).
    12. Thierry Magnac, 2018. "Quels étudiants pour quelles universités ? Analyses empiriques de mécanismes d’allocation centralisée," Revue économique, Presses de Sciences-Po, vol. 69(5), pages 683-708.
    13. Adam Kapor & Mohit Karnani & Christopher Neilson, 2019. "Negative Externalities of Off Platform Options and the Efficiency of Centralized Assignment Mechanisms," Working Papers 635, Princeton University, Department of Economics, Industrial Relations Section..
    14. Hakimov, Rustamdjan, 2016. "Contests at the workplace with and without prize selection: Testing theory in a field experiment," Discussion Papers, Research Unit: Market Behavior SP II 2016-211, WZB Berlin Social Science Center.
    15. 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.
    16. Machado, Cecilia & Szerman, Christiane, 2021. "Centralized college admissions and student composition," Economics of Education Review, Elsevier, vol. 85(C).
    17. Francesconi, Marco & Slonimczyk, Fabián & Yurko, Anna, 2019. "Democratizing access to higher education in Russia: The consequences of the unified state exam reform," European Economic Review, Elsevier, vol. 117(C), pages 56-82.
    18. Kenjiro Hirata & Shinpei Sano & Katsuya Takii, 2021. "How can a college's admissions policies help produce future business leaders?," OSIPP Discussion Paper 21E003, Osaka School of International Public Policy, Osaka University.
    19. Yenmez, M. Bumin, 2018. "A college admissions clearinghouse," Journal of Economic Theory, Elsevier, vol. 176(C), pages 859-885.
    20. Ersin K�rpeoglu & C. Gizem Korpeoglu & Isa Hafalir, 2020. "Parallel Innovation Contests," Working Paper Series 2020/06, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    21. Andreas Bjerre-Nielsen & Emil Chrisander, 2022. "Voluntary Information Disclosure in Centralized Matching: Efficiency Gains and Strategic Properties," Papers 2206.15096, arXiv.org.
    22. Wu, Binzhen & Zhong, Xiaohan, 2020. "Matching inequality and strategic behavior under the Boston mechanism: Evidence from China's college admissions," Games and Economic Behavior, Elsevier, vol. 123(C), pages 1-21.
    23. He, Yinghua & Magnac, Thierry, 2018. "A Pigouvian Approach to Congestion in Matching Markets," IZA Discussion Papers 11967, Institute of Labor Economics (IZA).
    24. Yeon-Koo Che & Youngwoo Koh, 2016. "Decentralized College Admissions," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1295-1338.
    25. Eun Jeong Heo, 2023. "Financial aid in college admissions: need-based versus merit-based," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 265-297, January.

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    More about this item

    Keywords

    college admissions; incomplete information; student welfare; contests; all-pay auctions; experiment;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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