Obvious Mistakes in a Strategically Simple College Admissions Environment

Ran I. Shorrer () and Sandor Sovago ()
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Ran I. Shorrer: Pennsylvania State University, United States of America
Sandor Sovago: Vrije Universiteit Amsterdam

No 17-107/V, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In a centralized marketplace that was designed to be simple, we identify participants whose choices are dominated. Using administrative data from Hungary, we show that college applicants make obvious mistakes: they forgo the free opportunity to receive a tuition waiver worth thousands of dollars. At least 10 percent of the applicants made such mistakes in 2013. Costly mistakes have externalities: they transfer tuition waivers from high- to low-socioeconomic status students, and increase the number of students attending college. To shed light on the mechanisms underlying mistakes, we exploit a reform that substantially increased the selectivity of admission with financial aid in some fields of study. Increased admission selectivity raises the likelihood of making obvious mistakes, especially among high-socioeconomic status and low-achieving applicants. Our results suggest that mistakes are more common when their expected cost is lower. Still, the average cost of a mistake in 2013 was 114-365 dollars.

Keywords: College admissions; dominated strategies; market design; obvious misrepresentation; school choice; strategy-proof (search for similar items in EconPapers)
JEL-codes: C70 D47 D61 D63 (search for similar items in EconPapers)
Date: 2017-11-10
New Economics Papers: this item is included in nep-des, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20170107

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