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College Admissions as a Market

One real world situation which could be interpreted as a matching market is college admissions, specifically college admissions in the United States. In this well-known market, college students create an application to make themselves appear as a more attractive candidate to a college, and colleges accept what they believe are candidates that will want to attend their college and make their college appear more prestigious. Therefore, the exchange being allocated is acceptances on both parts, since there exists the decision to accept a student on the part of the college, and the decision to accept a college on the part of the student. Further, in this simplified version of this real life phenomena we can consider currencies in this market could be considered to be acceptance letters given to students by the colleges and acceptances given to the college by the students.

A feature of this market that could constitute a “design choice” of this market is the way that a college makes its decisions on which candidate to accept. For example, some colleges may decide that they value GPA more than extracurricular activities, whereas other colleges may decide that they value standardized test scores more than any other potential factor. Since in the real world prestigious colleges in the US tend to score the candidate “holistically,” or at least that is what they say, students as a result try to portray themselves in their application as this idyllic balanced candidate. It is not difficult to imagine what would happen if prestigious colleges used different design choices, as we can look at East Asia as an example. These colleges’ “design choices” solely care about a test score, and therefore students spend a lot of extra time in “cram schools” preparing for this potentially life-changing test. This change in the market’s “design choice” has implications for the mental health of society, as student suicides are higher in these countries as a result of the monumentous pressure resulting from these tests.

This market is not strategy proof. Students could effectively lie about their choices by applying to multiple schools early decision, effectively saying all of these schools are my top choice when in reality they are restricted to only accepting one school. This is something some students actually do, however is not supposed to be allowed. The colleges are then under the impression that this particular student holds the college in their number one slot in their ranked preferences, but this was not the case.

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