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College Assignment as a Large Contest

Author

Listed:
  • Aaron Bodoh-Creed

    (Haas School of Business)

  • Brent Hickman

    (University of Iowa)

Abstract

We develop a model of college assignment as a large contest wherein students with heterogeneous abilities compete for seats at vertically differentiated colleges through the acquisition of productive human capital. We use a continuum model to approximate the outcomes of a game with large but finite sets of colleges and students. By incorporating two common families of affirmative action mechanisms into our model--admissions preferences and quotas--we can show that (legal) admissions preference schemes and (illegal) quotas have the same sets of equilibria, including identical outcomes and investment strategies. Finally, we explore the welfare costs of using human capital accumulation to compete for college admissions. We define the cost of competition as the welfare difference between a color-blind admissions contest and the first-best outcome chosen by an omniscient social planner. Using a calibrated version of our model, we find that the cost of competition is equivalent to a loss of $91,795 in NPV of lifetime earnings.

Suggested Citation

  • Aaron Bodoh-Creed & Brent Hickman, 2016. "College Assignment as a Large Contest," Working Papers 2016-27, Becker Friedman Institute for Research In Economics.
  • Handle: RePEc:bfi:wpaper:2016-27
    as

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    File URL: https://econresearch.uchicago.edu/sites/econresearch.uchicago.edu/files/2016-27.pdf
    File Function: November 2016
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Affirmative action; welfare costs of competition; contests; approximate equilibrium;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General

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