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College Admissions as a Market: Tournaments, Revealed Preferences, Affirmative Action

Every year, millions of (typically) high-school seniors submit tailored college applications, entering competition pools at higher-education institutions of their choosing. This well-known market of college admissions is two-sided – college admissions officers, reactively, extend invitations to candidates they deem as having the potential to contribute to their university’s continued success (via perceived ability/desirability and willingness/likelihood of attendance given acceptance) and accepted applicants decide which college (among invitations) they prefer the most.

In this scenario, the colleges a student applies to constitute the students initial preferences: each of these schools as a non-zero utility if the matching is realized. These non-zero utilities act as the good/service given by colleges – it is the value that they can offer matriculating students. Acceptances form the set of edges that are possible matches, and students typically choose the school which has the highest value. The currency by which the matching/service is realized is acceptance of the offer letter (assume tuition is a consideration in the decision to accept). These exchanges can only be meaningfully made between applicants and colleges.

Market design – The rule used to allocate acceptance offers is the college’s criteria for admissions. GPA, extracurricular activities, personal statements, recommendations, financial capacity, connections, how much a student wants to attend the school (e.g. Early Decision), etc. are all taken into consideration. Furthermore, a student’s race is also taken into consideration for affirmative action. Alternatives simply include different admission criteria.

Question to explore: Do rankings beget preferences or do preferences beget rankings?

Implications extend most readily to the job market – e.g. affirmative action for veterans, minorities, and those with disabilities.

Note: I wanted to explore the thought of considering one person as the amalgam of multiple economic agents i.e. the planner versus the doer, the investor versus the indulger, the sophisticated versus the naïve consumer. One example of a scenario in this market would be decisions to smoke (given that s/he values life, the planner would want to avoid smoking while the doer would prioritize immediate gratification). The market would consider the difference in utility (discounted over time – e.g. with unnoticed present bias for naïve consumers) individuals receive between each option, preferences, etc. However, I thought this might be a reach – just want some feedback for future consideration!

Sources: – Christopher N. Avery & Mark E. Glickman & Caroline M. Hoxby & Andrew Metrick, 2013. “A Revealed Preference Ranking of U.S. Colleges and Universities,” The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 425-467.


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