The College Admissions Problem Under Uncertainty

Hector Chade, Gregory Lewis and Lones Smith

No 125, 2006 Meeting Papers from Society for Economic Dynamics

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

Keywords: matching; directed search; noise (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-edu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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